Employers can reduce health benefits for older retirees, U.S. Supreme Court rules

The Supreme Court today gave employers a green light to reduce their health benefits for millions of retirees who turn 65 and become eligible for Medicare. The justices turned away a legal challenge from the AARP, the nation’s senior citizens lobby, which had contended these reduced benefits for older retirees violated the federal law against age discrimination.

The court’s action upholds in effect a rule adopted last year by federal regulators that says the “coordination of retiree health benefits with Medicare” is exempt from the anti-age bias law.

Advocates for companies and labor unions openly disagreed with the AARP and applauded the outcome. They said this compromise rule will encourage employers to maintain health coverage for their retirees.

Employers are not required by law to pay for health benefits for their retirees. And over the last decade, many employers have pulled back from providing these extra benefits because of the high cost.

But until today, it had been unclear whether it was legal to use a worker’s age – in this instance, 65 – to trigger a reduction in benefits.

david.savage@latimes.com