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Benefits equity ruling was a courageous act

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The behind-the-scenes story sometimes is more interesting than the main story, and we believe last week's ruling on an Equal Employment Opportunity Commission regulation affecting retiree health care plans falls into that category.

The main story, as we report on page 1, is that the 3rd U.S. Circuit Court of Appeals ruled that the EEOC has the right to issue a rule exempting retiree health care plans from the Age Discrimination and Employment Act.

The practical effect is that employers can continue to offer--because of the availability of Medicare--lesser health care benefits to older retirees than to younger retirees.

This ruling likely ends years of litigation and the resulting uncertainty for employers on whether they would be sued for age discrimination because they didn't provide the same level of health care benefits for Medicare-eligible retirees as they do for younger retirees.

Even more important and interesting was the change of heart by the EEOC. Years ago, the EEOC not only applauded a ruling--also by the 3rd Circuit--that said retiree health care plans are covered by ADEA, it incorporated the ruling in its compliance manual.

To the EEOC's credit, that wasn't the end of the issue. The agency's officials opened their doors to employers and organized labor, both of which warned of the anti-retiree consequences if the ruling stood. If employers had to spend equal amounts on health care coverage for the two groups of retirees, the EEOC was told, the inevitable result would be a cutback in benefits provided to younger retirees or even elimination of retiree health care coverage.

Those arguments obviously struck home with the EEOC as the agency not only accepted the arguments but also cited them in subsequent litigation.

Obviously, for an agency in charge of enforcing age discrimination law, the idea of sanctioning benefit inequities must have been difficult to accept. But at times, practicality triumphs over principle. Clearly, in the interest of ensuring the maximum benefits for all retirees, this was one such case and the EEOC was wise to recognize it as such.