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EEOC Informal Discussion Letter

The U.S. Equal Employment Opportunity Commission

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: Coordinating Medicare with Current Employees' Benefits

August 2, 2011


Dear ____:

This letter responds to your July 13, 2011 correspondence asking whether the Equal Employment Opportunity Commission's (EEOC's) regulatory exemption from the Age Discrimination in Employment Act (ADEA) for employers to coordinate retiree health benefits with Medicare eligibility would apply to current employees, and whether the ADEA otherwise would permit an employer to terminate a current employee's eligibility for group health insurance based on Medicare eligibility.

The EEOC's ADEA exemption for coordination with Medicare applies only to retiree benefits, not the benefits of current employees. The regulation specifically states that this narrow exemption shall affect "no other aspect of ADEA coverage of employment benefits." 29 C.F.R. §1625.32(c). Further, in Question 7 of the regulation's appendix, the EEOC explains that the retiree health exemption did not apply to current employees:

Q7. Does the exemption apply to health benefits that are provided to current employees who are at or over the age of Medicare eligibility (or the age of eligibility for a comparable State health benefit plan?)

A7. No. The exemption applies only to retiree health benefits, not to health benefits that are provided to current employees. Thus, health benefits for current employees must be provided in a manner that comports with the requirements of the Act. . . .

Whether the ADEA otherwise would permit an employer to terminate a current employee's eligibility for group health insurance based on Medicare eligibility will depend on the surrounding circumstances. Since workers typically become eligible for Medicare at age 65, eliminating group health eligibility for current employees when they become Medicare-eligible is an age-based action. As such, it would violate the ADEA unless it satisfies the statute's "equal benefit or equal cost" defense. The contours of this defense are explained in the EEOC's regulation at 29 C.F.R. § 1625.10, available at

With respect to meeting the equal benefit prong of the ADEA for providing health benefits to current employees who are Medicare-eligible, 29 C.F.R. §1625.10(e) specifically provides:

(e) Benefits provided by the Government. An employer does not violate the Act by permitting certain benefits to be provided by the Government, even though the availability of such benefits may be based on age. For example, it is not necessary for an employer to provide health benefits which are otherwise provided to certain employees by Medicare. However, the availability of benefits from the government will not justify a reduction in employer-provided benefits if the result is that, taking the employer-provided and Government-provided benefits together, an older employee is entitled to a lesser benefit of any type (including coverage for family and/or dependents) than a similarly situated younger employee. For example, the availability of certain benefits to an older employee under Medicare will not justify denying an older employee a benefit which is provided to younger employees and is not provided to the older employee by Medicare.

(Emphasis added)

If the employer cannot satisfy the equal benefit prong, it still may avoid ADEA liability by satisfying the equal cost prong of the defense. "Equal cost" ordinarily can be calculated in one of two ways – either on a "benefit-by-benefit" basis or a "benefit package" basis. Under the benefit-by-benefit approach, the employer most likely cannot prove that it expends an equal amount on health insurance for both younger and Medicare-covered workers where it eliminates the health benefits available to Medicare-eligible employees. As for the benefit package approach, to which your incoming correspondence alludes by suggesting that the employer could justify eliminating the health benefit if it spends more on "another benefit" for older workers, EEOC regulation 29 C.F.R. § 1625.10(f)(2)(iii) precludes this approach as an alternative to the benefit-by-benefit analysis for purposes of eliminating health benefits based on age:

(iii) A benefit package approach shall not be used to justify reductions in health benefits greater than would be justified under a benefit-by-benefit approach. Such benefits appear to be of particular importance to older workers in meeting "problems arising from the impact of age" and were of particular concern to Congress. Therefore, the "benefit package" approach may not be used to reduce health insurance benefits by more than is warranted by the increase in the cost to the employer of those benefits alone. Any greater reduction would be a subterfuge to evade the purpose of the [ADEA].

We also suggest that you contact the Centers for Medicare and Medicaid Services at the Department of Health and Human Services ( to inquire whether your plan to terminate the benefits of Medicare-eligible current employees would comport with Medicare rules. It is the EEOC's understanding that the Medicare program requires employers to offer current employees who are at or over the age of Medicare eligibility the same health benefits, under the same conditions, as offered to younger current employees. If this remains true, then Medicare laws may prohibit your organization from eliminating health coverage for Medicare-eligible current employees irrespective of the ADEA.

We hope you find this information responsive to your inquiry. Please note, however, that this letter constitutes informal advice pursuant to 29 C.F.R. § 1626.20(c), and therefore may not be relied upon by an employer within the meaning of section 10 of the Portal to Portal Act of 1947, incorporated into the Age Discrimination in Employment Act of 1967 through section 7(e)(1) of the ADEA.


Raymond L. Peeler
Senior Attorney Advisor

This page was last modified on September 23, 2011.

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