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EEOC Informal Discussion Letter

The U.S. Equal Employment Opportunity Commission

This document was rescinded in December 2019 as part of EEOC's effort to provide guidance and information that is current, accurate, and clear.

EEOC Office of Legal Counsel staff members wrote the following informal discussion letter in response to an inquiry from a member of the public. This letter is intended to provide an informal discussion of the noted issue and does not constitute an official opinion of the Commission.

ADEA: Retiree Health

December 16, 2004


Your October 28, 2004 letter to the Philadelphia District Office was forwarded to this office for response. You ask whether it is legal and consistent with EEOC policy for an employer to use "Medicare carve-out" health plans for current employees.

EEOC enforces the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621, et seq., which prohibits age discrimination against persons age 40 and older in any portion of the employment relationship, including employee benefits. As you note, EEOC regulations, at 29 C.F.R. § 1625.10(e), provide that, "it is not necessary for an employer to provide health benefits which are otherwise provided to certain employees by Medicare." In other words, so long as older employees receive the same benefits as younger employees, it does not matter for ADEA purposes whether some of those benefits are provided by Medicare.

The portion of the Compliance Manual that related to Medicare carve-out plans and that was rescinded applies only to retiree health benefits -- not employer-provided health benefits for employees. On April 22, 2004, the Commission voted to approve a final rule that would permit employers to provide different benefits to retirees depending upon whether they were eligible for Medicare. It is available on our web site at, but cannot be considered final until it is reviewed by the Office of Management and Budget and printed in the Federal Register. Most importantly, like the rescinded Compliance Manual section, the proposed final rule does not apply to the health benefits of employees.

Although Medicare carve-out plans that provide equal benefits to employees do not violate the ADEA, the practice of using Medicare as a primary insurer may violate Medicare law. The Department of Health and Human Services, Center for Medicare and Medicaid Services (CMS) now regulates this matter, and should be contacted directly if you seek further information with respect to the legality of using Medicare carve-out plans for current employees who are Medicare-eligible. Their mailing address is:

Center for Medicare and Medicaid Services
7500 Security Boulevard
Baltimore, MD 21244-180

We hope that the above information has been helpful. Note, however, that it does not constitute an official opinion of the Equal Employment Opportunity Commission within the meaning of the ADEA.


Raymond L. Peeler
Senior Attorney-Advisor

This page was last modified on December 18, 2019.