Early Retiree Insurance Program 45 CRR Part 149

On May 12, 2010, our clients received an email update on the Early Retiree Reinsurance Program from us. While we realize not all our partner health plans offer early retiree benefits, this is a timely discussion point for those plans that do. Interim final rule that implements the Early Retiree Reinsurance Program was published May 5, 2010. The provision for this rule was included in the Patient Protection and Affordable Care Act that was signed into law March 23, 2010. The regulations for the Early Retiree Reinsurance Program were effective on June 1, 2010. An important caveat is that the program will end when all funds have been allocated, but in no case later than January 1, 2014.

Under the reinsurance program, employers and plan sponsors are reimbursed for a portion of the costs incurred in providing group health benefits to early retirees and their spouses, surviving spouses and dependents. Early retirees, as defined by the rule, are former employees who are at least 55 years of age and not yet Medicare-eligible. However, claims may include those of spouses, surviving spouses, and/or dependents of an early retiree. “The Secretary will reimburse plans for certain claims between $15,000 and $90,000 (with those amounts being indexed for plan years starting on or after October 1, 2011). The purpose of the reimbursement is to make health benefits more affordable for plan participants and sponsors so that health benefits are accessible to more Americans than they would otherwise be without this program.”1 80% of valid claims that fall in the above thresholds will be reimbursed. “The statute at section 1102(b)(2) requires employment-based plans to have programs and procedures in place to generate cost savings for participants with chronic and high-cost conditions.” 1

Plan Sponsors applying must be able to explain to HHS how they expect to use any reimbursements and must also do two year projections. The funds received must be used to reduce plan costs, but it will be important for groups to understand exactly how funds will be used and that they will not be used as general revenue funds. The plan sponsor’s summary of how it will use the reimbursement must detail how the funds will be used to maintain the sponsor’s level of effort in contributing to support the applicable health plan. 

1 http://www.regulations.gov/search/Regs/home.html#documentDetail?R=0900006480ae7204 

Link to Application Information:  http://www.hhs.gov/ociio/regulations/#early_retiree

FAQ Document:  http://www.hhs.gov/ociio/Documents/errp_qa_firstset_05_14_2010.pdf 

HHS link for Regulations and Guidance:  http://www.hhs.gov/ociio/regulations/