Last week, the Equal Employment Opportunity Commission agreed that employers have the right to reduce or eliminate medical benefits for retirees who reach age 65 and become eligible for federally funded Medicare.
This ruling has been met with both support and criticism from several sides. It includes a specific provision that exempts employers from age discrimination lawsuits if they choose to scale back benefits for retirees once they turn 65. And it allows employers to set up two distinct levels of coverage for retirees – a more comprehensive policy for retirees who are not yet 65, and a lesser package (or none at all) for retirees who are over 65.
Those who are critical of the plan, including AARP, point out that it would result in adverse consequences for 10 million retirees who currently rely on a former employer’s health care package as either primary coverage or a supplement to Medicare. For those individuals who have had the same plan for years – often paying little or no premiums – it would indeed be a hardship to suddenly have to begin buying a Medicare supplement and paying the whole premium out of pocket. Some sort of subsidy would have to be put into place to allow these people, often living on a fixed income, to continue to have comprehensive health insurance.
But nobody over age 65 should have private health insurance as primary coverage in this country. Once a person is eligible for Medicare, any other benefits from a previous employer (or even from a current employer if the person is still working) should downgrade to a supplementary level.
People need to remember that employers are not required to provide health insurance at all – to current employees or retirees. That’s why it’s considered a benefit. Employers are only required to provide worker’s compensation to cover on-the-job injuries. Anything beyond that is a bonus. And employers have been feeling the squeeze of ever-increasing premiums for several years.
It makes sense that employers should be able to offer less health insurance coverage to retirees who are over 65 versus those who are not yet eligible for Medicare. A retiree under 65 is dependant on either retiree benefits or self-funded private insurance (a much more expensive prospect than the Medicare premiums a person will pay after reaching 65). A retiree who is 65 or older has Medicare as primary coverage, and only needs to worry about getting a supplement to cover the portion of medical bills not paid by Medicare. So to say that both groups should get equal coverage from former employers makes no sense.
There is only so much money to go around. Limiting benefits for retirees 65 and older – who all have access to Medicare – will allow cash-strapped employers to continue to offer comprehensive health insurance to retirees who are not yet eligible for Medicare. Requiring employers that offer retiree benefits to do so at the same level for all age groups increases the likelihood of employers discontinuing retiree benefits all together.
