Judge Blocks Rule Allowing Companies to Cut Benefits When Retirees Reach Medicare Age.

A federal district judge on Wednesday blocked a Bush administration rule that would have allowed employers to reduce or eliminate health benefits for retirees when they reach age 65 and become eligible for Medicare.

Ten million retirees could have had benefits cut under the rule, which was adopted last April by the Equal Employment Opportunity Commission.

The rule "is contrary to Congressional intent and the plain language of the Age Discrimination in Employment Act," the 1967 law that bans most forms of age discrimination in the workplace, Judge Brody wrote.

The erosion of retiree health benefits is an explosive political issue.

The rule would have created an explicit exemption to the age discrimination law, allowing employers to reduce health benefits for retirees when they became eligible for Medicare. Under the rule, Judge Brody said, employers could have given older retirees "health benefits that are inferior" to those given retirees younger than 65.

[The AARP was] the main plaintiff in the case . . . .

Christopher G. Mackaronis, a Washington lawyer for AARP, said Wednesday: "The rule was an example of executive arrogance. Federal agencies have no authority to rewrite laws passed by Congress. The rule was adopted in April 2004, but officials tucked it in their back pocket while they courted older voters last year. After the election, they moved forward with the regulation."

No law requires employers to provide health benefits to workers or retirees. Employers can legally provide benefits to active workers and not to retirees. Many employers have eliminated retiree health benefits. But, Judge Brody said, if an employer provides benefits to retirees, it cannot discriminate among them on the basis of age.