The Patrick-Murray administration has urged Massachusetts employers to consider applying for newly available federal funding that will help them reduce the cost of providing health insurance to their employees who retire early. Employers are encouraged to apply early, as funding is limited and will be distributed on a first-come, first-served basis by the U.S. Department of Health and Human Services.
“As we work hard to implement reforms to control the rising cost of health care, I encourage employers who offer health insurance to early retirees to take advantage of the federal Early Retiree Reinsurance Program,” said Governor Deval Patrick. “This program will help reduce costs for employers who show a strong commitment to their retirees.”
The Early Retiree Reinsurance Program was established by Congress as part of the Affordable Care Act, with $5 billion in funding. The program provides reimbursement to participating employment-based plans for a portion of the cost of health benefits for early retirees and their spouses, surviving spouses and dependents. In the United States, the percentage of large firms offering retiree coverage has dropped from 66 percent in 1988 to 31 percent in 2008, largely due to rising premium costs.
Both self-funded and insured plans are eligible, including those offered by private entities, state and local governments, non-profits, religious entities, unions and other employers. Employers who are accepted into the program will receive reinsurance reimbursements for medical claims for retirees age 55 and older who are not eligible for Medicare, as well as their spouses, surviving spouses and dependents.
Health benefits that qualify for relief include medical, surgical, hospital, prescription drug and other benefits between $15,000 and $90,000. Claims incurred between the start of the plan year (often January 1) and June 1 are credited toward the $15,000 threshold for reimbursement. However, only medical expenses incurred after June 1, 2010, are eligible for reimbursements under this program.
Unless the funding expires sooner, the Early Retiree Insurance Program ends on January 1, 2014, when early retirees will be able to choose from the additional coverage options that will be available through the health insurance exchanges created under the new national health reform law. Employers can access the program application online at: www.hhs.gov/ociio/regulations/index.html#early_retiree.