High Court Says Companies Can Cut Health Benefits for Those Over 65

WASHINGTON — In an action likely to have an enormous impact as the Baby Boom generation retires, the Supreme Court on Monday refused to consider whether it is unconstitutional for employers to reduce health-care benefits for retired workers once they qualify for Medicare.

The court's action let stand a ruling by the federal Equal Employment Opportunity Commission, which said employers could treat retirees differently by age.

AARP, the nation's largest group for people 50 or older, had challenged the ruling, arguing that the commission's rules violated laws against age discrimination. But the commission argued that the law included an exemption that allowed employers to take into account Medicare coverage of those 65 and older.

David Certner, AARP's legislative policy director, said his organization was "disappointed by the court's decision today. The court's action clears the way for employers to discriminate by reducing or terminating benefits for older retirees simply because they've turned 65 years old.

"This double standard, one tier of coverage for those under 65, and another lower tier for those 65 and over, is especially troubling because it comes from the EEOC, the federal government agency created to enforce anti-discrimination policies," he said.

Certner said the result of the action would be to require retirees over 65 to shoulder a heavier burden of health-care costs. Medicare does not fully cover these costs, and beneficiaries are required to pay 20 percent of the charges that Medicare does cover.

"The timing of this new rule couldn't be worse. Due to rising costs and fixed incomes, many retirees are already forgoing needed services that have simply become unaffordable," Certner said.

The EEOC rule, which took effect in December, was a response to a 3rd U.S. Circuit Court of Appeals ruling in 2000 that said the age discrimination law required employers to spend the same amount on health insurance benefits for retirees eligible for Medicare as they did on younger retirees.

The commission's ruling had the support of labor unions, which predicted employers would reduce or eliminate retiree health benefits for all workers if the companies could not take Medicare into account when structuring benefits.

The Associated Press contributed to this story.