Third Circuit Permits Reduction In Retiree Benefits To Coordinate with Medicare or State-Sponsored Benefits

On June 4, 2007, the Federal Court of Appeals for the Third Circuit allowed the Equal Employment Opportunity Commission (EEOC) to implement its proposed regulation permitting employers to reduce or eliminate employer sponsored retiree health benefits when retirees become eligible for Medicare or for a state-sponsored retiree health program. (AARP v EEOC, No. 05-4594, 6/4/07). The ruling resolved seven years of uncertainty faced by employers that maintain traditional retiree programs coordinated with Medicare.