WASHINGTON — The Supreme Court on Monday gave employers a green light to reduce their health benefits for millions of retirees who turn 65 and become eligible for Medicare.
The justices turned away a legal challenge from AARP, the nation’s senior citizens lobby, which had contended the reduced benefits for older retirees violated the federal law against age discrimination.
The federal Equal Employment Opportunity Commission rule makes clear that employers can spend more on retirees under 65 years of age than those over 65 without running afoul of age discrimination laws.
The court’s action upholds the rule, which took effect in December.
Advocates for companies and labor unions openly disagreed with AARP and applauded the outcome. They said this compromise rule will encourage employers to maintain health coverage for their retirees.
Employers are not required by law to pay for health benefits for their retirees. And over the last decade, many employers have pulled back from providing these extra benefits because of the high cost.
But until Monday, it had been unclear whether it was legal to use a worker’s age — in this instance, 65 — to trigger a reduction in benefits.
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