Employers Can Still Coordinate Retiree Medical Plans with Medicare—Even in the Third Circuit

On June 4, 2007, a unanimous three-judge panel of the U.S. Court of Appeals for the Third Circuit upheld an Equal Employment Opportunity Commission (EEOC) regulation that would exempt from the Age Discrimination in Employment Act (ADEA) employer coordination of retiree health benefits with Medicare benefits.

In AARP v. EEOC, No. 054594 (3d Cir. 2007), the court upheld a lower court’s decision to lift an injunction that the American Association of Retired Persons (AARP) originally obtained in March 2005 to block implementation of the EEOC exemption (Exemption). In so ruling, the court upheld the Exemption, reasoning that “the proposed exemption permits the narrow practice of coordinating employer-sponsored retiree health benefits with eligibility for Medicare and state-sponsored
health programs for the necessary and proper purpose of encouraging employers to provide the greatest possible health benefits for all retirees. The regulation is consistent with the purposes and intent of the ADEA and is a reasonable exercise by the EEOC of authority delegated to it by Congress.”

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