The Law: Will employers start trimming retiree health benefits?

Fred Dochat. Photo by Bill Cramer/Wonderful Machine

After working at Armstrong World Industries’ research center for 45 years, Fred Dochat of Lancaster, Pa., was forced to retire and began receiving a pension and health care and dental benefits.

Since Dochat left Armstrong in 1989, his wife, Barbara Ann, has been treated for cancer, he’s had heart bypass surgery, and they both rely on prescription medications to control glaucoma and osteoporosis. And even though his health care premiums doubled in 2004 and his copayments and deductibles doubled the next year, “we were able to survive because of the health care benefits I earned,” says Dochat, now 80.

While he still retains coverage through Armstrong, it became much less secure in 2004 when the Equal Employment Opportunity Commission issued a regulation allowing employers to reduce benefits to workers or retirees who become eligible for Medicare or a state health plan.

AARP opposed the regulation—which affects 10 million 65-plus Americans. It represented Dochat and five other retirees and filed suit, arguing that the regulation improperly exempted employers from provisions of the Age Discrimination in Employment Act.

The EEOC argued that the rule allowed employers to coordinate health care coverage with Medicare and protected retirees from unexpected gaps in coverage. On March 25, the U.S. Supreme Court refused to hear AARP’s appeal.

As a result, no longer must Armstrong or any other U.S. employer provide health care coverage to retirees like Dochat, who are covered by Medicare.

“This is very scary for the future,” says senior AARP attorney Laurie McCann. “These retirees have relied on this coverage, and they’re not in a position to get other employment or other insurance. They’re also generally not in a position to alter their savings strategies for retirement.”

What It Means to You:

Understand the retirement health benefits provided by your employer. Though the courts have given employers the option of changing benefits once retirees reach 65, it doesn’t necessarily mean that all employers will exercise it.

Emily Sachar is a journalist and author based in Brooklyn, N.Y.