Post-Retiree Health Care

Court Stops Implementation of NEA-Supported Rule on
Post-Retiree Health Care

On March 30, 2005, a federal court ruled that the Equal Employment Opportunity Commission (EEOC) could not implement an NEA-supported ruling that would allow employers to continue to offer health benefits for retirees not yet eligible for Medicare.

For the past five years, NEA has been fighting to exempt from the Age Discrimination in Employment Act ("ADEA") the coordination of employer-provided retiree health benefits with Medicare. Many NEA affiliates have bargained into their contracts health benefits for early retirees until they reach age 65 and become eligible for Medicare. Opponents such as the AARP have argued that such plans constitute age discrimination.

Last year, the EEOC issued a ruling stating that such plans do not violate the ADEA. Opponents alleged that the ruling jeopardized health benefits of Medicare-eligible retirees. However, NEA believes that the rule does not jeopardize the health benefits of retirees 65 or older. Instead, the ruling simply ensures that educators and others across the country can retire knowing their health care coverage is protected until they are eligible for Medicare.

Just before the EEOC rule would have become final, AARP brought a lawsuit in the Philadelphia federal court seeking to stop implementation of the rule. EEOC agreed to stay implementation for 60 days while the lawsuit -- AARP v. EEOC -- was heard. NEA filed an amicus curiae brief in support of the EEOC position, urging the court to deny the injunction sought by AARP.

On March 30, the court ruled in AARP's favor, and blocked implementation of EEOC's exemption rule. EEOC has indicated that it will appeal to the Third Circuit.

NEA believes the court's ruling is incorrect. Congress expressly gave EEOC the power to exempt certain practices from the broadly worded proscriptions of the ADEA if it finds that such an exemption is "necessary," proper," and "in the public interest."  The exemption rule promulgated by EEOC serves precisely this purpose by making it unnecessary for employers to reduce or eliminate retiree health benefits that are coordinated with Medicare in order to avoid potential liability under the ADEA. We have urged the Justice Department to proceed with EEOC's appeal as expeditiously as possible. And, NEA intends to file an amicus curiae brief with the Third Circuit supporting EEOC's position.

FAQs About the Retiree Health Benefits Ruling