New Rule Covering Retired Seniors' Health Benefits

Shortly before the New Year was ushered in, the Equal Employment Opportunity Commission (EEOC) in Washington, adopted a new policy under which employers would be authorized to reduce or drop completely health benefits for retirees when they reach 65 and go on Medicare.

The new policy also enables employers to provide more comprehensive health benefits for employees under 65, a feature supported by both employers and some labor unions.

The adopted policy affects as many as 10 million retirees over age 65. It was implemented by the EEOC because of the rising costs of health care and the longer life span of retirees, which impact employers sharply according to a recent Kaiser Family Foundation survey.

Many employers and labor union officials had told the EEOC that if they were forced to continue to provide identical benefits for retirees under 65 as well as for those over 65, they would eliminate the benefits completely.

Another factor which prompted the new policy, EEOC officials said, was the enactment of the Part D Medicare prescription drug subsidy program for those over 65 who are on Medicare.

Part D guaranteed the additional coverage for the over-65 group, but provided no such coverage for the under-65 group. With the new EEOC policy now in force, employers could opt to provide such coverage for the under-65 retirees without having to incur the larger cost of extending the benefit to those retirees over 65.

The changed regulations were welcome by employers and labor unions, but opposed by the AARP, a senior advocacy group.

James A. Klein, president of the American Benefits Council, a lobbying group for large employers, told the New York Times, "Without this [new] rule, many more retirees, especially early retirees, could find themselves without employer-sponsored coverage."

In the same article, Gerald M. Shea, a high-ranking AFL-CIO official, stated: "Given the enormous cost pressures on employer-sponsored health benefits, we support the flexibility reflected in the rule as a way to maximize our ability to maintain comprehensive coverage for active and retired workers."

Meanwhile, Christopher G. Mackaronis, an AARP attorney, stating his organization's position on the new EEOC policy, said the rule "gives employers free rein to use age as a basis for reducing or eliminating healthcare benefits for retirees 65 and older. Ten million people could be affected- adversely affected- by the rule."

The AARP has asked the U.S. Supreme Court to review the new EEOC policy on grounds that it discriminates against over- 65 retirees and will shift benefit costs toward that group.

CHARGE MEDICARE BEING PRIVATIZED: In the winter 2007 issue of "Prime Time", the official bulletin of the American Federation of State, County and Municipal Employees, AFL-CIO (AFSCME), the organization charges that "large federal overpayments currently being funneled to private Medicare Advantage (MA) health plans...are driving Medicare straight toward privatization".

The Medicare Advantage plans are operated by private health insurers, funded by the federal government, and are available for seniors who opt out of Medicare to go into a private health plan. The MAs were created in 2003.

Since that time, about 20 percent of Medicare members have switched to MA plans. Simultaneously Congress has increased the federal subsidy to these private plans, to a point, AFSCME charges, that "they receive overpayments that average 12 percent a year more than it costs Medicare to serve" an individual beneficiary.

AFSCME charges that the overpayment is even higher for private fee-forservice plans that allow their members to go to any doctor or hospital that accepts a plan's coverage. For these plans, the overpayment is an average of 19 percent more than Medicare spends for the average member's care.

These private plans are becoming increasingly attractive because of the extra benefits they provide to regular Medicare coverage that federal health officials expect that this year the group deserting Medicare for private plans will swell to 24 percent.

The sweeter deals for the Medicare Advantage plans resulted from strong support from President George W. Bush, who also championed the cause of private insurers to operate the federally subsidized Part D drug prescription plans.

The swing to private health insurers will likely change if a Democrat is elected president and the House and Senate come under Democratic control in this November's elections, a scenario that has a good chance of becoming fact.