The Third Circuit Changes the Landscape of the ADEA and the Retiree Health Benefits

The Third Circuit Court of Appeals rendered a decision in Erie County Retirees Association v. County of Erie, No. 99-3877, 2000 WL 1053833 (3d Cir. Aug. 1, 2000) that expands the prohibitions of the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621 et seq. to retirees. Much to the surprise of most practioners, the Court held that an employer may violate the ADEA by providing Medicare-eligible retirees health benefits that are inferior to the benefits offered to retirees who are not eligible for Medicare, reasoning that Medicare eligibility is a proxy for age. This is directly contrary to the widely held view that the ADEA does not apply to retirees. Based on this understanding, many employers provide retiree health benefits only until a retiree qualifies for Medicare. The Third Circuit’s holding, however, puts this practice at risk, as well as any employer program that provides inferior health benefits to Medicare-eligible retirees as compared to younger retirees.

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