The recent Equal Employment Opportunity Commission ruling, which, unless overturned, will permit corporations to eliminate “supplemental health benefits” of those retirees age 65 or older (and Medicare eligible), has placed our health benefits from SBC at great risk.
This issue finds retiree organizations badly split over the EEOC ruling. AARP wants to overturn the ruling, while Labor ardently supports the ruling. The Unions, particularly public employee Unions – have bargained for early-out benefits and have not expressed concerns about Medicare eligible retirees.
The TelCo Retirees Association , Inc. strongly opposes the EEOC decision and feels it is “age-based discrimination.” Further, our individual retirement decisions were based upon health benefits promised by Pacific Bell/Nevada Bell (SBC). We believe that the Congress, not EEOC, should make policy choices distinguishing groups of retirees by age and that as a matter of principle, to discriminate against older retirees should be opposed.
We support the so-called “equal benefits equal cost” concept. If a corporation pays for coverage that is more extensive than Medicare for under age 65 retirees, then Medicare-eligible retirees should receive either equally extensive coverage (The corporation pays for what Medicare does not, up to the level of the early retiree coverage.) or “equally expensive coverage” (The company contributes a dollar cost – including an objective value for Medicare – that is comparable to cost of coverage for the under 65 retirees.).
April 2, 2005
TelCo Retirees Association, Inc. Members:
Since there has been considerable discussion and news reports concerning the recent decision by the U.S. District Court for the Eastern District of Philadelphia and because this issue could have serious future implications for all retirees over the age of 65, I would like to share with you some portions of the official government report.
Judge Anita Brody of the U.S. District Court said that the proposed regulation violated Congressional intent “as expressed in the plain language of the Age Discrimination in Employment Act (ADEA) and as interpreted by the U.S. Court of Appeals for the Third Circuit.”
Brody, who granted AARP’s petition to delay implementation of the regulation, permanently enjoined the Commission “from publishing or otherwise implementing the regulation at issue.”
In April 2004, the EEOC voted 3-1 to approve the rule which permits employers to reduce or end benefits when a retiree becomes eligible for Medicare or comparable state retiree health benefits without violating the ADEA. (The Commission was on the verge of publishing this rule in final form when Judge Brody granted AARP’s request for a preliminary injunction.) The exemption to the ADEA (which is widely supported by the employer community and organized labor, is intended to address a growing concern that the Age Discrimination Act might be construed to create an incentive for employers to eliminate or reduce retiree health benefits.
In a response to those concerns in August 2001, the EEOC revoked its long held position that employee benefit plans that either end or are reduced when a retiree becomes eligible for Medicare, violated the ADEA. Recognizing that the former policy could have the effect of discouraging employers from providing health care benefits for its retirees, the agency also announced that it would no longer litigate such cases while the question was under review.
In her March 30 decision, Judge Brody acknowledged that the Commission argued “persuasively” that without the exemption, employers would reduce or eliminate health benefits for all employees. She added, however, that the Third Circuit “already ruled that allowing employers to give retirees 65 or older health benefits that are inferior to the health benefits given to retirees who are younger than 65 is illegal under the ADEA ruling.”
“And the Third Circuit has already decided that Congress intended for the provisions of the ADEA to apply when an employer reduces health benefits based on Medicare eligibility·an administrative agency, including the EEOC, may not issue regulations, rules or exemptions that go against the intent of Congress.”
“While EEOC has the power to issue rules, regulations and exemptions within these explicit or implicit gaps that Congress left in the ADEA, in this case the Third Circuit held that Congress did not allow for ambiguity with regard to the applicability of the ADEA to retiree health benefits.”
CONCLUSION:
For the reasons stated above, the AARP’s motion for summary judgment is granted and the EEOC’s motion for summary judgment is denied. The challenged regulation, originally published at 68 Fed. Reg. 41542, is contrary to law and violates the clear intent of Congress in passing and amending the ADEA as articulated in Erie County, 220F.3d 193. The EEOC will be permanently enjoined from publishing or otherwise implementing the challenged regulation.
Anita B. Brody, J.
To Our Membership:
In my judgment, AARP has won the first round in this critical issue, but the battle is far from won. All retirees over the age of 65 must remain vigilant as this ruling continues to wind its way through the courts and Congress.
This would be a propitious time to write your Congressional representatives and to encourage their support of this federal judicial decision!
Charles Gilbert, President/CEO
Employee Retirement Income Security Act
(ERISA) 1974
A. Pension Benefit Guarantee Corporation (PBGC) U.S. Government
- Company must have 25 or more employees
- Must be a private employer (no government organization)
- Must have a DEFINED BENEFIT PENSION PLAN (pays employees a Specific percentage of their salaries – 1 to 1.5% of the average of three to five years final pay, multiplied by total years of service.
- Corporations contribute to the ãPENSION BENEFIT GUARANTEE CORPORATION” annually by a complicated calculation, number of employees, their ages and salary levels, estimates of the percentage of employees who will remain with the company long enough to vest in the pension plan, etc., etc.
- Corporations participating in the ãPBGCä must have a pension fund large enough to provide for current retirees and a percentage of funds for those who will retiree during the coming years.
- Maximum monthly pension payments paid by the “PBGC” for a single employer pension plan. These payments are predicated upon your age at retirement.
| 55 years of age | $1,610.80 |
| 60 years of age | $2,326.71 |
| 62 years of age | $2,827.84 |
| 65 years of age | $3,579.58 |
(Participants in a single-employer plan who earn more than $115,000.00 a year might not get everything they were promised under a typical pension formula because their benefits would top the “PBGC” limit.)
7. Corporate pension funds currently at risk. A recent financial review of 100 members revealed that over 28 were in a deficit position. Such companies are now required to make sizable corporate financial contributions to their pension funds -something many of them have not had to do over a decade due to the earnings and appreciation of their pension fund investments.
Sumner K. Emery’s Comments on Proposed Rule:
Disclosure Regarding Portfolio Managers of Registered Management Investment Companies On the SEC Site
*note (This is a large fax image file.)
http://www.sec.gov/rules/proposed/s71204/s71204-7.pdf 
NRLN (National Retirees Legislative Network)
Q & A Page on H.R. 1322
http://www.nrln.org/Questions%20and%20Answers.htm
(This legislation is a vital issue for all corporate retirees and warrants the full support of the TelCo Retirees Association, Inc.. If you haven’t yet written your Congressional Representative about the passage of this legislation, now is an excellent time to do so.) We must remain vigilant and aggressive to assure our promised corporate health benefits continue as defined in our retirement documents.
Charles Gilbert, President/CEO
Click here to contact your Congressional Representative
This web site, The Electronic Frontier Foundation , has useful information on how to contact the various departments of the United States Government http://www.eff.org/congress/