Updated August 7, 2026. Quick answer: if your employer offers retiree health coverage, eligibility is almost always an age-and-service combination measured on the day you separate — commonly something like 55 and 10 years. Being months short can forfeit a benefit worth more than the entire severance, and federal law will not save you: retiree medical is a welfare benefit, and welfare benefits do not vest by law.
Why there is a cliff at all
Pensions and retiree health sit in two different legal boxes. ERISA’s vesting rules apply to pension plans, and the statute exempts welfare plans from them in one line: those rules apply to any employee benefit plan “other than— (1) an employee welfare benefit plan.” And a welfare plan is defined to include one maintained to provide “medical, surgical, or hospital care or benefits.”
🔴 That is the whole asymmetry. Your accrued pension is nonforfeitable by statute. Your retiree health benefit is whatever the plan document says it is, for as long as the plan document says so. There is no partial credit and no vesting schedule — you either meet the combination on your separation date or you do not.
What the Supreme Court decided about “lifetime” retiree benefits
For decades some courts inferred that retiree health benefits were meant to last for life. In M&G Polymers USA, LLC v. Tackett, decided in January 2015, a unanimous Supreme Court rejected that inference. The Court held that these agreements are interpreted “according to ordinary principles of contract law,” and faulted the court below for failing “even to consider the traditional principle that courts should not construe ambiguous writings to create lifetime promises.”
The operative sentence for anyone reading their own plan documents: “when a contract is silent as to the duration of retiree benefits, a court may not infer that the parties intended those benefits to vest for life.” Three years later the Court reinforced it in CNH Industrial N.V. v. Reese, adding that “a contract is not ambiguous unless it is subject to more than one reasonable interpretation.”
⚠️ Read plainly: silence is not a promise. If the documents do not say the benefit continues, the honest planning assumption is that it may not — and separately, plans must “provide a procedure for amending such plan,” which is where an employer’s reserved right to change or end the benefit generally lives.
Where the cliff is actually written down
It is in the summary plan description, and the law requires it to be there. The SPD must state “circumstances which may result in disqualification, ineligibility, or denial or loss of benefits”; the Labor Department’s regulation spells the list out further, requiring “a statement clearly identifying circumstances which may result in disqualification, ineligibility, or denial, loss, forfeiture, suspension, offset, reduction, or recovery.”
Ask for the SPD in writing and read four things:
- The eligibility combination — the exact age and the exact years, and whether it is a sum (age plus service reaching a number) or two separate tests.
- How service is counted — elapsed time or hours, whether a partial year counts, and whether any leave, break in service or acquisition period counts toward it.
- The measurement date — almost always the separation date. Whether paid notice, garden leave or salary continuation extends your service date is the single highest-value question in the document, because it is sometimes negotiable.
- The reservation-of-rights clause — whether the employer has reserved the right to amend or terminate, and whether anything anywhere promises a duration.
If you are short
🔴 This is the one severance term genuinely worth asking about, and almost nobody asks. If you are a few months short of the combination, the question to raise is not whether you can have more money but whether your separation date can be set after the date you reach the combination — or whether salary continuation extends the service date rather than merely paying you. The answer depends on the plan’s own definitions, so ask with the SPD language in front of you and get any answer in writing.
You have time to ask: a release of age claims carries at least 21 days to consider it, or 45 in a group program, plus 7 days to revoke — how long you have to sign a severance agreement.
If the answer is no, the benefit is gone and the replacement question is a coverage question: COBRA versus ACA is the comparison, and an ACA subsidy depends on the income you are about to choose, which makes it a planning variable rather than a fixed bill. If you do have retiree coverage, audit what it actually covers before assuming it is equivalent.
Where this sits in the sequence: step two of the decision order, before anything irreversible. The deadline calendar has the dates.
Sources
Welfare plans exempt from ERISA vesting: 29 U.S.C. §1051(1); welfare-plan definition at 29 U.S.C. §1002(1). M&G Polymers USA, LLC v. Tackett (2015, unanimous) and CNH Industrial N.V. v. Reese (2018, per curiam), read in full text. Plan amendment procedure: 29 U.S.C. §1102(b)(3). SPD contents: 29 U.S.C. §1022(b) and 29 CFR §2520.102-3(l). All read 7 August 2026. General information about statutory deadlines and plan mechanics, not legal or tax advice on your agreement. Your plan documents and your agreement govern, and they may be more generous than the statutory floor.