Benefits

Retiree Health Care Reimbursement Program Still Growing

By Staff Report

Jan. 27, 2011

The Department of Health and Human Services has approved applications of more than 5,000 organizations to receive partial reimbursement of health care expenses of early retirees and their dependents, an agency official said Jan. 24.


The Early Retiree Reinsurance Program, established as part of last year’s health reform law, is certain to grow. In all, 6,500 early retiree health care plan sponsors have filed applications to participate in the program, said Richard Popper, director of insurance programs at the Office of Consumer Information and Insurance Oversight, a unit of HHS.


Under the program, the government will reimburse employers and other sponsors of early retiree health care plans for a portion of claims incurred starting June 1, 2010, by retirees who are at least 55 but not eligible for Medicare, as well as their covered dependents regardless of age.


After a participant incurs $15,000 in health care claims in a plan year, the government will reimburse plan sponsors for 80 percent of an enrollee’s claims up to $90,000. In general, the reimbursement must be used to reduce employers’ and/or retirees’ health care costs.


Congress appropriated $5 billion for the program, which was seen as a way to encourage employers to continue their early retiree health care plans until at least 2014, when subsidized coverage for the uninsured will be available through newly established state insurance exchanges.


As of the end of last year, the government already had distributed $1 billion in reimbursement to approved applicants.


Popper, who spoke at a briefing in Washington co-sponsored by the AARP and Alliance for Health Reform, said updated program information will be provided next month when the Obama administration releases its proposed fiscal 2012 budget.


Researchers at the Employee Benefit Research Institute in Washington have projected that the money is likely to run out sometime this year.  


Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


 


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