Employers these days are constantly looking for ways to reduce their health
care costs. Older workers tend to push up premiums, so why not encourage
them to leave so as to get those premiums down? One company tried that
and got sued for age discrimination. The company won at the district court
level, but the Eighth Circuit Court of Appeals reversed and found in part
for the employee.
In the case, the employer, Associated Underwriters, was facing financial
strain and considered lowering its health insurance fees as a cost-saving
measure. In executing its plan to lower health insurance costs, the company
urged employee Marjorie Tramp and another employee over the age of 65
to discontinue enrollment in the company's health insurance plan and
to instead enroll in Medicare. Management then engaged in email correspondence
with insurers concerning quotes for coverage, and those emails further
revealed that the company anticipated that its costs would be lowered
since many of the "older, sicker" employees had dropped off
of the plan.
Tramp was eventually fired and sued the company for age discrimination,
among other things.
The employer prevailed on summary judgment at the district court level,
and Tramp appealed. The U.S. Court of Appeals for the Eighth Circuit
reversed in part,
finding that Tramp could feasibly pursue a claim for age discriminationbecause the employer's consideration and treatment of insurance premiums
were not "divorced" from age. Further, the court held, a jury
could find that considering age in conjunction with health care costs
could be discriminatory. The court also pointed to the fact that the email
correspondence reflected an insensitivity and crudeness about the relationship
between age and health care premiums on the company's part, and those
statements could very well demonstrate the employer's intent to lay
off older, more expensive employees. Summary judgment was accordingly
reversed on the age discrimination claim and Tramp was able to pursue
her claim further.
The upshot: Employers are always making changes to their benefits programs,
and in most cases, such changes are not discriminatory. But if the impact
is to adversely affect a protected class of employees, such as older workers,
then they may very well be crossing the line into illegality.