37 Fair Empl.prac.cas. 1346,37 Empl. Prac. Dec. P 35,269,6 Employee Benefits Ca 1629, 761 F.2d 1257 (8th Cir. 1985)

The International Brotherhood of Electrical Workers, Local 1439, AFL-CIO (the Union) and Eugene McMahon, sued the Union Electric Company (the Company), alleging that the Company's employees' contributory group life insurance policy violated the Age Discrimination in Employment Act. (ADEA), 29 U.S.C. § 621 et seq. After a bench trial, the district court entered judgment in favor of the Company, and the Union appealed. 585 F. Supp. 261 (E.D. Mo. 1984). We affirm.

Since 1960, the Company has maintained a group life insurance plan for its employees which offers them optional coverage in an amount equal to twice their salaries if they elect to enroll in the plan. The plan provides that employees are eligible to enroll after fifteen days of continuous employment with the company if they apply for coverage when hired. If they do not apply initially, employees may apply during their first sixty days on the job. Thereafter, applications will be approved only if the employee is under age forty and shows acceptable evidence of insurability. The premium for all employees under the plan is a level premium of $ .35 per thousand dollars of coverage per month, with the employer paying the balance of the premium for each employee. Because the plan functions on standard actuarial principles, as participating employees grow older their premiums rise and so does the Company's share of the premium.

In its action against the Company, the Union alleged that the maintenance of the arbitrary age ban under the plan violated ADEA.¹  We cannot agree. The ADEA makes it unlawful for an employer

to * * * discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age.

29 U.S.C. § 623(a) (1).

Congress assisted the courts in interpreting the ADEA by setting forth its findings and purposes. It declared that the ADEA was intended

to promote employment of older persons based on their ability rather than age; to prohibit arbitrary age discrimination in employment; to help employers and workers find ways of meeting problems arising from the impact of age on employment.

29 U.S.C. § 621(b).

Careful review of the eligibility provisions of the plan leads us to conclude that it does not constitute arbitrary age discrimination in employment or compensation. By providing all employees, regardless of age, with an opportunity to enroll in the plan when hired, and by setting a level premium schedule for employees under which the company picks up the rising premium increments as employees age, the plan complies with the provisions of the act. The forty-year old age cutoff in the eligibility provisions simply reflects adherence to sound actuarial principles; without the age cutoffs, older employees could opt into the plan at an advanced age (with a higher risk of claim) without having contributed to the premium pool through their younger low-risk years. We hasten to add, however, that the result of this appeal might well be different if the policy did not include the initial sixty-day open enrollment period for older employees or if the employees' share of the premium did not remain level over the life of the policy. These conditions are not present in this case, however, and do not affect our consideration.

Accordingly, the judgment of the district court is affirmed.