Kiss Those Benefits Goodbye?

(CBS/AP)  Retirees who qualify for Medicare would see their health benefits cut or eliminated under a proposal approved Thursday by the Equal Employment Opportunity Commission.

The commission voted 3 to 1 in approval of the proposed rule, with three Republicans in favor and one Democrat opposing it.

Under the rule, employers can coordinate health benefits for retirees who are eligible for Medicare or a similar state-sponsored health benefit. Employers had been prohibited from doing so since 2001, after a federal appeals court concluded that coordinating health benefits was illegal age discrimination.

"Such benefits are provided on a voluntary basis at the discretion of each employer and the Commission is acting to preserve these valuable benefits for retirees," Commission Chair Cari Dominguez, a Republican, said in a statement.

The Times reports that several commission members argued that employers are more likely to continue providing health benefits to retirees under 65 if they are allowed to reduce or eliminate benefits for those 65 and older.

The rule change has the backing of the American Benefits Council - a trade group representing large employers - as well as the National Education Association and the American Federation of Teachers.

The language of the rule adopted by the panel says that it "is not intended to encourage employers to eliminate any retiree health benefits they may currently provide."

Before it becomes final, the proposed rule must go through further review by federal agencies and the White House Office of Management and Budget.

The AARP, which represents millions of retirees, has campaigned against the rule change and told the New York Times that it will "explore a range of different steps, including litigation" to block the rule if it is not changed.

"More than 12 million Medicare beneficiaries receive benefits from their former employers," Michael Naylor, the group's advocacy director, said in a statement. "AARP is concerned that this rule may jeopardize those benefits."

On its web site, the retiree lobbying group furthermore notes that the new rule is identical to Section 631 of the Senate's version of the Medicare Rx bill, which was killed by Congress "after hearing from tens of thousands of AARP members. Unfortunately, the EEOC has turned a deaf ear to those same concerns and is now trying to accomplish through the backdoor what Congress refused to do directly in the law."

The commission had the support of Rep. John Boehner (GOP, Ohio), chairman of the House Workforce Committee. He said the rule would "help preserve important retiree health benefits for millions of American seniors."

The Ohio representative had sent a letter to Dominguez in December, pushing for the rule. The letter was also signed by Reps. Robert Andrews, D-N.J., and Sam Johnson, R-Texas.

Stuart Ishimaru, the only member of the commission to vote no, says its role is to guard against discrimination, and not make health care policy.

"I came to the commission as a civil rights lawyer," Ishimaru told the Times. "Before making an exemption to a major civil rights law, you need a compelling reason, which I have not seen."