The Supreme Court settled the interpretive rule in 2015, and it settled it against the retirees. In M&G Polymers USA, LLC v. Tackett, 574 U.S. 427 (2015), the Court reviewed a Sixth Circuit line of cases that had inferred lifetime vesting from the context of labor negotiations. It began from the statutory asymmetry: "Although ERISA imposes elaborate minimum funding and vesting standards for pension plans, §§ 1053, 1082, 1083, 1084, it explicitly exempts welfare benefits plans from those rules, §§ 1051(1), 1081(a)(1)." It then repeated an earlier holding: "[e]mployers or other plan sponsors are generally free under ERISA, for any reason at any time, to adopt, modify, or terminate welfare plans." The Court vacated the judgment below and directed that collective bargaining agreements establishing these plans be read according to ordinary principles of contract law rather than any thumb on the scale for vesting.
What this looks like in a real plan document. Employers write reservation-of-rights language, usually a short paragraph in the summary plan description stating that the company reserves the right to amend, modify, or terminate the plan at any time and for any reason, including with respect to people who have already retired. Where that language is present and unambiguous, courts generally enforce it. Where a document instead promises coverage "for life," or ties it explicitly to the duration of the retiree's life rather than to the term of an agreement, the promise can be enforceable. The practical consequence for anyone counting on the benefit is that the governing documents are the whole answer, and a benefits statement or a retirement-seminar slide is not one of them.
After 65, the coverage almost always pays second. Medicare's secondary payer rules turn on employment status, not on whether coverage came from an employer. The working-aged rule at 42 U.S.C. 1395y(b)(1)(A)(i) reaches a group health plan covering someone "by virtue of the individual's current employment status," and applies only where the employer has 20 or more employees. Retiree coverage is by definition not based on current employment, so the rule does not apply and Medicare pays first. The retiree plan then behaves as a supplement, often paying some or all of the deductibles and coinsurance Medicare leaves behind, and frequently coordinating drug coverage through an employer group waiver arrangement rather than a standalone Part D plan.
This is where the expensive mistake lives. Because the coverage feels like a continuation of the employer plan, retirees routinely assume it lets them delay Medicare the way active employment does. It does not. The Part B special enrollment period at 42 C.F.R. 407.20(c) requires that the group health coverage be "by reason of the current employment status of the individual or the individual's spouse," and the same section says in terms that the "former employee" language in the definition of a group health plan does not apply for this purpose. Someone who relies on retiree coverage past 65 therefore has no special enrollment period when it ends, waits for the general enrollment period, and can be charged a permanent Part B premium surcharge. The same is true of COBRA continuation coverage, and the published pages on Medicare enrollment periods and the Medicare late enrollment penalty say so.
The form of the promise is changing. Rather than sponsoring a group plan for retirees, an employer may fund a health reimbursement arrangement and let the retiree buy their own coverage, including through an individual coverage HRA integrated with Medicare Part A and Part B or with Medicare Advantage. Economically that is a defined contribution: the employer's exposure is a stated dollar amount rather than the cost of a plan, and the risk of medical inflation moves to the retiree. The same shift happens inside a traditional plan whenever the employer caps its contribution in dollars, because a fixed employer share means the retiree absorbs every future increase.
