Judge Protects Equality of Benefits for Retirees

PHILADELPHIA —  A federal judge barred the government Wednesday from allowing companies to provide younger retirees with better healthcare benefits than they gave to older ones who qualified for Medicare.

The AARP, the nation’s largest advocacy group for retirees, sued in February to block the proposed rule change, saying that different packages for young and old amounted to age discrimination.

In her finding in favor of the AARP, U.S. District Judge Anita B. Brody said the U.S. Equal Employment Opportunity Commission lacked the power to make the change.

Brody said the proposed regulation also would violate a legal precedent that companies could offer different health plans to retirees of different ages only if they were of equal value or provided equal benefits.

Cari M. Dominguez, chairwoman of the equal opportunity commission, said she planned to appeal.

The commission had proposed exempting retiree health plans from age discrimination rules as part of an attempt to slow the trend of companies eliminating retiree health benefits altogether.

The percentage of companies with more than 1,000 workers offering health coverage to retirees dropped from 80% in 1991 to 57% in 2003, according to a study by the benefits consulting firm Hewitt Associates and the Kaiser Family Foundation.

“We recognize that there has to be some sacrifice here, but there has to be shared sacrifice,” said AARP lawyer Michele Pollak. “You can’t just arbitrarily decide that the oldest, frailest people will have their benefits reduced so that the less old can get a better package.”

Many companies now offer a type of bridge health insurance for retirees in their late 50s and early 60s who aren’t old enough to qualify for government health programs and are likely to find it difficult to pay for medical care out of their own pockets.

It is also common for the same companies to provide a less comprehensive package, or nothing at all, to workers once they turn 65 and qualify for Medicare.

American Benefits Council President James A. Klein said companies increasingly saw their prime responsibility as providing coverage for the younger group.

“Those are the people who need it more,” Klein said.

The AARP rejects that argument.