Early Retiree Health Care Plan Sponsors Have to Dec. 31, 2014, to Use ERRP Funds

Employers and other early retiree health care plan sponsors have until the end of 2014 to use federal government claims reimbursement funds authorized by the health care reform law, the Centers for Medicare and Medicaid Services said.

While plan sponsors should use Early Retiree Reinsurance Program funds “as soon as possible,” they will have until Dec. 31, 2014, to use the money, CMS said in a notice issued march 16. The notice comes after informal guidance CMS provided last month on the issue.

Under the ERRP, early retiree health care sponsors are reimbursed for 80 percent of claims—up to $90,000—after a participant incurs $15,000 in expenses. Plan sponsors must use the reimbursement to offset increases in their premiums or costs or plan participants’ costs, such as premium contributions and out-of-pocket expenses such as deductibles.

Proceeds cannot be used to add to plan sponsors’ general revenues.

CMS disclosed in February that it has stopped paying new claims.

Through Jan. 19—the latest date public information is available—$4.73 billion in reimbursement payments had been made. But that amount, when added to pending reimbursement requests, exceeds the $5 billion Congress appropriated for the ERRP.

Jerry Geisel writes for Business Insurance, a sister publication of Workforce Management. To comment, email editors@workforce.com.

Stay informed and connected. Get human resources news and HR features via Workforce Management’s Twitter feed or RSS feeds for mobile devices and news readers.