AARP Sues Over Benefits Change

The nation’s largest advocacy group for Americans 50 and older 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.

AARP said in a lawsuit filed in Philadelphia 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 laws.

The new rule would allow companies that offer benefits to retirees to reduce or eliminate them once retirees reached 65 and qualified for the 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 age-discrimination laws.

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 workers and older retirees.

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

A judge in U.S. District Court 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.

AARP said its position was supported by an opinion by the U.S. 3rd Circuit Court of Appeals in 2000 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 that until that court decision, it had been common for employers to offer a different level of benefits to retirees older than 65.

The group issued a statement Friday calling AARP’s lawsuit “shortsighted and contrary to the interests of retirees.”

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