Sun Editorial:

Penalized at 65

New rule that allows employers to dump retirees’ health coverage is unfair

Monday, Jan. 7, 2008 | 2 a.m.

The Equal Employment Opportunity Commission has announced that employers can reduce or eliminate health benefits for retirees who have turned 65 and are eligible for Medicare.

The new policy creates two classes of retirees those younger than 65 who get the full benefits promised to them and those 65 and older, who could lose health coverage they have been using or had counted on when they retired.

Naomi Earp, EEOC chairwoman, told The New York Times last week that the new rule was designed to help companies continue offering benefits to the nation’s 10 million retirees who depend on employer-provided programs for primary coverage or to supplement Medicare.

Critics of the new policy say that rather than reducing benefits, companies more likely will opt to dump retirees 65 and older. A lawyer for the AARP told the Times that the new rule appears to contradict the 1967 Age Discrimination in Employment Act. The EEOC has said the 1967 law allows exemptions that are “necessary and proper in the public interest.”

It is obvious, however, that this new policy is in industry’s best interests. Federal officials are already trying to figure out how to sustain the Medicare program financially, and flooding it with millions of new participants who previously had private coverage is shortsighted.

This policy also is unfair to workers who may have based salary and benefits package decisions they made years ago on the fact that their companies would continue to offer them coverage when they retired. Even workers who planned are penalized by this change.

Medicare coverage is not the same as privately provided coverage, and retirees who were promised the latter should continue to receive it no matter what their age.

Benefits for existing retirees should be protected, and the new rules should apply only to younger people who are still working and have time to plan for their retirement health coverage.