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EEOC Issues Comprehensive Guidance on Discrimination in Employee Benefits
On October 3, 2000 the U.S. Equal Employment Opportunity Commission
(EEOC) issued new guidance on the application of certain
anti-discrimination laws to health and life insurance benefits,
long-term and short-term disability benefits, severance benefits,
pensions and other retirement benefits and early retirement incentives
offered by employers.
(EEOC) issued new guidance on the application of certain
anti-discrimination laws to health and life insurance benefits,
long-term and short-term disability benefits, severance benefits,
pensions and other retirement benefits and early retirement incentives
offered by employers.
Discrimination Based on Pregnancy Under the Pregnancy Discrimination
Act, an employee benefit plan must cover pregnancy, childbirth and
related medical conditions in the same manner and extent that it covers
other medical conditions. This includes the same deductibles, co-pays,
choices of physicians, etc. Additionally, an employer must allow women
who are on pregnancy leave to accrue service credits in the same manner
as those who are leave for other reasons.
Act, an employee benefit plan must cover pregnancy, childbirth and
related medical conditions in the same manner and extent that it covers
other medical conditions. This includes the same deductibles, co-pays,
choices of physicians, etc. Additionally, an employer must allow women
who are on pregnancy leave to accrue service credits in the same manner
as those who are leave for other reasons.
Age Discrimination The Age Discrimination in Employment Act (ADEA)
prohibits discrimination on the basis of age under employee benefit
plans except in cases where an employer can justify not offering equal
benefits (e.g. same type and amount of benefits) to older and younger
employees under the "equal cost defense" or can demonstrate that the
difference was due to an ADEA permitted "offset."
prohibits discrimination on the basis of age under employee benefit
plans except in cases where an employer can justify not offering equal
benefits (e.g. same type and amount of benefits) to older and younger
employees under the "equal cost defense" or can demonstrate that the
difference was due to an ADEA permitted "offset."
Under the equal cost defense, an employer may provide older workers with
reduced benefits if the employer spends an equal amount of money or
incurs an equal cost on behalf of older workers as it does for younger
workers. This defense only applies to benefits that become more costly
to provide with age, for example, life insurance, health insurance and
disability benefits. The defense does not apply to pension or severance
benefits.
reduced benefits if the employer spends an equal amount of money or
incurs an equal cost on behalf of older workers as it does for younger
workers. This defense only applies to benefits that become more costly
to provide with age, for example, life insurance, health insurance and
disability benefits. The defense does not apply to pension or severance
benefits.
Special rules apply where employees are required to pay part of the
premium. For example, if health insurance premiums increase for older
employees, older employees cannot be required to pay a higher percentage
of the premium than younger worker are required to pay. Alternatively,
older employees can be given the option to reduce their benefits in
order to keep the premium cost the same.
premium. For example, if health insurance premiums increase for older
employees, older employees cannot be required to pay a higher percentage
of the premium than younger worker are required to pay. Alternatively,
older employees can be given the option to reduce their benefits in
order to keep the premium cost the same.
In limited circumstances the ADEA also permits employers to offset the
amount of certain types of benefits provided to older workers with the
amounts of other age-based benefits those employees receive, e.g.
Medicare, Social Security, or other employer provided benefits. In
benefits are offset, older workers must receive, in total, benefits that
are no less favorable than the benefits provided to similarly situated
younger workers.
amount of certain types of benefits provided to older workers with the
amounts of other age-based benefits those employees receive, e.g.
Medicare, Social Security, or other employer provided benefits. In
benefits are offset, older workers must receive, in total, benefits that
are no less favorable than the benefits provided to similarly situated
younger workers.
Discrimination Based on Disabilities While an employer generally may not
discriminate against an individual with a disability on the basis of
that disability, the Americans with Disabilities Act (ADA), recognizes
that some types of benefit plans rest on the assessment of risks and
costs associated with various health conditions. If an employer provides
equal benefits (same deductibles, caps on coverage, etc.) to all
employees, there is no ADA violation. If, however, benefits are unequal
based on an employee's disability (for example, if the plan singles out
a particular disability, a discrete group of disabilities or a
disability in general), the benefit plan is unlawful unless the employer
can justify the distinction. A plan will not be considered a subterfuge
if the disability-based distinction is a based on sound actuarial
principles or related to actual or reasonably anticipated experience.
discriminate against an individual with a disability on the basis of
that disability, the Americans with Disabilities Act (ADA), recognizes
that some types of benefit plans rest on the assessment of risks and
costs associated with various health conditions. If an employer provides
equal benefits (same deductibles, caps on coverage, etc.) to all
employees, there is no ADA violation. If, however, benefits are unequal
based on an employee's disability (for example, if the plan singles out
a particular disability, a discrete group of disabilities or a
disability in general), the benefit plan is unlawful unless the employer
can justify the distinction. A plan will not be considered a subterfuge
if the disability-based distinction is a based on sound actuarial
principles or related to actual or reasonably anticipated experience.
Other Forms of Discrimination An employer may not discriminate in
eligibility, amount or charges for employee benefits on the basis of
race, color, sex, national origin or religion. Thus, for example, even
if it costs an employer more to provide certain benefits to women, the
employer may not charge female employees more or provide lesser
benefits. Nor may employers use sex-based actuarial tables to calculate
benefit amounts.
eligibility, amount or charges for employee benefits on the basis of
race, color, sex, national origin or religion. Thus, for example, even
if it costs an employer more to provide certain benefits to women, the
employer may not charge female employees more or provide lesser
benefits. Nor may employers use sex-based actuarial tables to calculate
benefit amounts.