AARP sues over benefit limits for retirees

Saturday, February 5, 2005

PHILADELPHIA -- The nation's largest advocacy group for older Americans asked a federal court Friday to block the government from making a policy change that would allow companies to offer fewer health benefits to retirees when they become eligible for Medicare.

The AARP claimed in a lawsuit that the Equal Employment Opportunity Commission would overstep its authority if it gave final approval to rules exempting retiree health benefits from federal age discrimination law.

The new rule would allow companies to reduce or cut benefits for those over 65 and qualified for federal Medicare health program.

In a statement, EEOC chairwoman Cari M. Dominguez, said: "The new rule will help safeguard existing and future health benefits for America's retirees" by letting employers provide them benefits without violating the age discrimination law.

Supporters of the rule change, including employer groups and some unions, had argued that employers facing skyrocketing costs might stop offering retiree benefits altogether if they were forced to provide the same level of care to younger and older retirees.

"Any delay in implementing the rule will endanger vital protections for retirees," Dominguez said.

A U.S. District Court judge issued an order late Friday afternoon blocking the EEOC from implementing any rule change for at least 60 days while the lawsuit makes its way through the courts.

The AARP said its position is supported by a 2000 opinion by the 3rd U.S. Circuit Court of Appeals that held that offering two different types of packages to younger and older retirees would violate U.S. anti-discrimination laws.

The American Benefits Council, a group representing big companies and retirement-plan providers, said until that court decision, it had been common for employers to offer a different level of benefits to retirees above age 65.

The group issued a statement Friday calling the AARP's lawsuit "shortsighted and contrary to the interests of retirees."

The AARP filed the complaint on behalf of several members who had their benefits reduced or ended in recent years.

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