We are terribly concerned about the cost of prescription drugs and the latest Equal Employment Opportunity Commission ruling to allow companies to drop medical plan coverage for retirees 65 and older. If it happens, many of us will have to declare bankruptcy and live out our lives without supplemental medical coverage. Is that any way to treat us---the few remaining World War II veterans? � Bob D.
From the editor:
Earlier this year the Equal Employment Opportunity Commission (EEOC) voted to allow employers to reduce or eliminate health benefits for retirees when they become eligible for Medicare at age 65. The agency said that such cuts do not violate the civil rights law banning age discrimination, reversing the effect of a federal appeals court ruling in 2000 that such age-based distinctions were unlawful.
In recent years a growing number of companies have cut back employer-paid health benefits for retirees. In contrast to pension financing, companies are not required to set aside funds to pay for retirees� health benefits. Health plans can be changed or terminated at the company�s choosing. Losing employer-provided health insurance can mean hundreds of dollars in unexpected costs for retirees.
Recently new government estimates suggest that employers will reduce or eliminate prescription drug benefits for about 3.8 million retirees when Medicare offers such coverage in 2006, according to a story appearing in The New York Times. The article also said that this number represents one-third of all retirees with employer-sponsored drug coverage.
No other aspect of the new Medicare law is causing more concern. During negotiations on the 2003 Medicare drug legislation TSCL frequently heard from supporters like you who fear losing employer-provided health care coverage. TSCL supported and lobbied for measures that subsequently became part of the new law, that would provide incentives for companies to maintain coverage. It remains to be seen whether the incentives will work.
In late July Medicare officials proposed standards for employer-sponsored drug benefits. According to the New York Times, employers say their decisions about whether to continue offering benefits to retirees will depend to a large degree on the final federal rules, in particular, the criteria for deciding whether their retiree drug benefits are as generous as those provided by Medicare.
TSCL is continuing to monitor this situation.
Source: �Commission to Allow Insurance Cuts for Retired Employees,� Robert Pear, The New York Times. �Medicare Law Is Seen Leading to Cuts in Drug Benefits for Retirees, Robert Pear,� The New York Times, July 14, 2004.
September 2004
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