Recent EEOC Decision Could Help Maintain Employer-Sponsored Health Insurance, Editorial States

Main Category: Health Insurance / Medical Insurance
Article Date: 08 Jan 2008 - 5:00 PDT

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A recent decision by the Equal Employment Opportunity Commission that employers can legally eliminate or reduce health benefits for retirees when they reach age 65 and become eligible for Medicare and retain benefits for retirees younger than age 65 "is a welcome step that could help slow the deterioration of employment-based health insurance" and "help far more people than it hurts," according to a New York Times editorial (New York Times, 1/5). The decision allows employers to establish two classes of retirees -- those younger than age 65 and those ages 65 and older -- and offer different benefits to each group. In addition, the decision allows employers to eliminate or reduce health benefits for the spouses or dependents of retirees ages 65 and older (Kaiser Daily Health Policy Report, 1/2).

According to the editorial, the decision is "based on a plausible premise: If employers struggling with the rising costs of health care have to provide equal benefits, they will be more likely to eliminate all of their retiree coverage or reduce benefits to the younger retires than to increase benefits to their Medicare-eligible retirees."

The editorial states that, although the "regulation is clearly unfair to people who were willing to accept lower wages while working in return for lifetime health benefits," no "pain-free answer" exists for the "burden of rising health care costs." The editorial concludes, "The least painful solution is to let Medicare carry the burden for those 65 and older while freeing employers to focus on younger retirees, who need help the most" (New York Times, 1/5).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation© 2005 Advisory Board Company and Kaiser Family Foundation. All rights reserved.