For the last several years there has been uncertainty about whether employers could coordinate retiree health coverage with Medicare. On March 24, 2008, the United States Supreme Court, by refusing to review the matter, wrote the final chapter.

In effect, the final regulations issued by the Equal Employment Opportunity Commission (“EEOC”) on December 26, 2007 allow employers to coordinate retiree health coverage with Medicare. Employers can amend, modify or even terminate retiree health coverage for Medicare eligible retirees. What is important to note is that these provisions only apply to retiree health coverage. They do not apply to health coverage provided to active employees, or Medicare-eligible dependents of active employees.

The Supreme Court’s action should give employers comfort to go forth with their retiree health plans, coordinating them with Medicare, as they deem appropriate.

The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained in this Benefit Beat is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.