We originally reported that a number of Erie County retirees claimed that they were being forced at age 65 (when one first becomes Medicare eligible) into a supplement plan that was inferior and more expensive than the plan they had before 65. At that time, the federal trial court ruled that the retirees could not make such a claim, but the federal appeals court disagreed, finding they could in fact make the claim and sending the case back to the trial court for a decision on the ADEA charges.

As we commented back then, the case was considered controversial, particularly in the private sector where retirees may find themselves at age 65 with only Medicare Parts A and B and no supplement. According to Insurance Coordinator Cheryl Stillman, "Even though the Commonwealth and municipalities may not be subject to an ADEA challenge concerning their Medicare supplement plans, we kept watch on the Erie County case since any additional rulings could have ramifications here."

There is a disturbing twist to the case since our first report. When the appeals court sent it back to the trial court, we reported then that Erie County had to prove all its retirees, under and over 65, were being treated equally in terms of benefits or its insurance costs for both groups were equal.

Since Erie could not prove equal benefits or costs, the trial court ruled that the county violated the ADEA. And here's when events in the case take a less-than-desirable turn.

In reaction to the court's ruling, Erie County replaced, what was considered, the superior plan for retirees under 65 with a lesser plan comparable to the over-65 Medicare supplement plan. It also required the under-65 retirees to pay a premium equal to the Medicare Part B premium.

When Erie County downgraded the insurance for the under-65 retirees, it seriously weakened any continuing charges of ADEA violations by its Medicare retirees. Apparently the retirees reached the same conclusion and decided to settle their lawsuit.

"Unfortunately, the desired goal of improving benefits for the Medicare retirees was thwarted by Erie's sleight of hand," comments Stillman. "Instead of all retirees being insured under a better plan, the Medicare retirees stayed put while the benefits for the others (under 65) were lowered and their costs increased.

"We seriously doubt that such an unbelievable turn-of-events would occur in Massachusetts. There are protections already built into our state law that should prevent public Medicare retirees here from being treated unfairly, as they were in Pennsylvania."

When the Erie decision was issued, health benefit experts predicted that there could be a major push, particularly from the private sector, to change the federal law so that an ADEA violation, like the one against Erie county, could no longer be found. Such a move is now underway.

By year's end, the Equal Employment Opportunity Commission (EEOC), which is the federal agency primarily responsible for investigating and prosecuting ADEA violations, is expected to issue new regulations in response to the Erie decision. These new regulations would allow employers to reduce or end health insurance benefits for Medicare retirees without violating the ADEA.

According to the EEOC, it has come to recognize that its current policy, which prohibits discriminating against Medicare retirees, could have the practical effect of discouraging employers from offering health insurance benefits to their retirees. According to Stillman, "It's regrettable to see the feds moving in this direction.

"Again, it must be noted that the EEOC's decision should have no direct impact on our members insured under Medicare. Fortunately, Mass. law protects them from the unequal treatment sought by the EEOC."