Two Health Regulations to Watch For

By Andrew Zebrak

May. 29, 2004

Much has been made about the Republicans keeping control of the White House and widening their margin in Congress. What has received less attention is what this means to federal agencies.

    For example, President Bush’s re-election will enable two key agencies—the U.S. Department of Health and Human Services and the U.S. Equal Employment Opportunity Commission—to more easily wrap up some important health care regulations in 2005.

Medicare rules
    Health and Human Services is in charge of filling in the blanks for the new Medicare prescription drug benefit enacted in December 2003. The drug coverage is set to begin January 1, 2006. Although the basic Medicare drug benefit was specified in the legislation, many details were left to be determined, as is often the case when Congress passes a new law.

    A division of Health and Human Services called the Centers for Medicare and Medicaid Services is going to spell out the requirements that employers must fulfill to receive Medicare subsidies for providing prescription drug benefits to retirees. These requirements will also determine how employers can make their retiree health coverage secondary to (i.e., wrap-around) the Medicare drug benefit. These details will drive the cost and administrative burdens for the different options available to employers in choosing their retiree health care strategy.

    Final regulations should be issued this month–January 2005.

Age discrimination
    The other regulatory action will come out of the EEOC, which is trying to establish that employers can provide reduced health benefits to retirees who are eligible for Medicare–without violating age discrimination laws. This should be allowed, the EEOC has said, because Medicare benefits offset the lower employer coverage, retiree health coverage has historically worked this way, and it will enable more employers to provide retiree benefits.

    The EEOC regulation basically reverses a court ruling, Erie County Retirees Association v. Erie County, which says providing health benefits to Medicare-eligible retirees that are inferior to the benefits provided to other retirees (those under 65) violates the age-discrimination laws.

    Business groups and organized labor support the EEOC’s position, while the AARP does not. The final EEOC rule has been delayed by the presidential election and vocal opposition from the AARP. The Bush administration is now in the late stages of reviewing the rule.

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