As the U.S. nears the start of Baby Boomer retirement the Equal Employment Opportunity Commission has made a new rule that could catch millions off guard.
On Wednesday the EEOC said that employers could reduce or eliminate health benefits for retirees when they turn 65 and become eligible for Medicare.
The policy, set forth in new regulation, allows employers to establish two classes of retirees, with more comprehensive benefits for those under 65 and more limited benefits or none at all for those older.
More than 10 million retirees rely on employer-sponsored health plans as a primary source of coverage or as a supplement to Medicare.
Premiums for employer-sponsored health insurance rose an average of 6.1 percent this year and have increased 78 percent since 2001, according to surveys by the Kaiser Family Foundation. Because of the rising cost of health care and the increased life expectancy of workers, the commission said, many employers refuse to provide retiree health benefits or even to negotiate on the issue.
In general, the commission observed, employers are not required by federal law to provide health benefits to either active or retired workers.
The EEOC commission told to New York Times "The final rule is not intended to encourage employers to eliminate any retiree health benefits they may currently provide."
But AARP and other advocates for older Americans attacked the rule. "This rule gives employers free rein to use age as a basis for reducing or eliminating health care benefits for retirees 65 and older," said Christopher G. Mackaronis, a lawyer for AARP, which represents millions of people age 50 or above and which had sought in court to forestall the regulation's adoption in final form. "Ten million people could be affected — adversely affected — by the rule."