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Editor: Mitchell H. Rubinstein
New York Law School

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Sunday, January 27, 2008

EEOC Issues Rule Stating That Employer's Can Reduce Retiree Health Insurance Once They Qualify For Medicare

Eeoc_2  A December 27, 2007, A.P. article entitled EEOC Clarifies Retiree Health Plans  discusses a December 26, 2007 EEOC rule which permits employers to reduce retiree health insurance once they are eligible for Medicare. The rule thus makes clear that employers can spend less on employees under 65 than those over 65. This rule codifies a practice which most employers already follow.

The EEOC's press release is available here. The EEOC also published a question and answer list that many might find help that is available here.   A copy of the new rule as published in the Federal Register is available here. It will be codified at 29 CFR 1625 and 1627.

Mitchell H. Rubinstein

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Comments

The danger here is that the employer's health insurance carrier typically cuts back the health insurance coverage provided, while the level of the retiree’s contribution to the employer's plan is retained without modification. Typically the objective of this type of exercise is to have Medicare serve is the retiree’s primary health insurance provider and the “company plan” serve as the secondary provider. Unless the retiree’s contribution to the employer’s plan is adjusted to reflect the amount of the Medicare premium he or she is paying or, in the alternative, if the retiree’s contribution to the employer’s plan is not reduced, the employer reimburses the retiree for his or her Medicare premium, the retiree will be receiving essentially the same level of health insurance coverage but at a higher cost. Although the retiree is not required to elect to be covered by Medicare, or designate Medicare as the primary health insurance provider, typically the employer’s health insurance carrier's contract for benefits will not provide benefits that are otherwise available to the individual under Medicare – thereby making it essential that the individual elect to name Medicare as his or her primary health insurance provider.

Posted by: Randall | Jan 28, 2008 5:03:06 AM

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