Early Retiree Reinsurance Program

Learn About the Affordable Care Act Early Retiree Reinsurance Program

Early Retiree Reinsurance Program - Is your former employer approved?. Jupiterimages

The Affordable Care Act, signed into law in March 2010, creates a new program called the Early Retiree Reinsurance Program.

Because of the economic downturn and increasing health care costs many large American companies have stopped providing former employees with retiree health coverage.

If you are an early retiree without health coverage and not yet eligible for Medicare you may have to pay much higher premiums (possibly up to four times what a younger adult pays) and have out-of-pocket expenses (such as copays, coinsurance, and deductibles) that are a lot higher than your previous employer-sponsored insurance plan.

Affordable Care Act Early Retiree Program

The Early Retiree Reinsurance Program provides $5 billion in financial assistance to employers and unions to help them maintain coverage for early retirees age 55 and older who are not yet eligible for Medicare. Because of high insurance rates for older retirees and restrictions due to pre-existing conditions, if you retire without employer-sponsored health coverage before you are eligible for Medicare You could see your life savings diminish (or even disappear) because of medical bills.

According to the U.S. Department of Health and Human Services (HHS), employers and unions that are accepted into the reinsurance program will be reimbursed for a percentage of medical claims for early retirees and their spouses, surviving spouses, and dependents. These savings can be used to reduce your employer’s health care costs, provide you with lower health insurance premiums, or both.

Employers and unions that are accepted into the program will receive reinsurance for the claims of high-cost retirees and their families (80 percent of the costs from $15,000 to $90,000). The reinsurance program ends on January 1, 2014 when the Health Insurance Exchanges are up and running.

The Early Retiree Reinsurance Program (ERRP) not only helps commercial businesses and unions, but it also provides financial relief for schools and other educational institutions, state and local governments, and non-profit organization.

Strong Interest in the Program

HHS reports that there has been much interest from businesses and organizations about ERRP. Since the program was introduced in April 2010, HHS has received applications from more than 50 percent of Fortune 500 companies, all major unions, and government entities in all 50 States and the District of Columbia. As of early September 2010, more than 2000 organizations have been improved.

And, starting in September 2010, applicants that have been approved can submit employee medical claims dating back to June 1, 2010. Starting in October 2010, organizations began to receive reinsurance payments on those claims.

Benefits and Oversight of ERRP

Reinsurance payments to businesses are for services that are typically covered by Medicare, including medical and mental health services, surgical procedures, inpatient hospital stays, and prescription drug benefits. ERRP does not support benefits beyond those that seniors would normally receive in Medicare.

To participate in the program, a health plan sponsor must have in place programs and procedures that produce or have the potential to produce cost savings for retirees who have chronic and high-cost conditions.

And employers and unions that participate in ERRP will be subject to audits of their health benefit plans to ensure fiscal integrity.

ERRP Is a Bridge to 2014

The Early Retiree Reinsurance Program provides temporary assistance to employers and unions to help make health care coverage more available for Americans. The program ends on January 1, 2014, when early retirees and their families, along with others, will be able to choose from a range of coverage options that will be available in the private Health Insurance Exchanges.

ERRP Resources

The following resources provide addition information about ERRP:

  • Early Retiree Reinsurance Program - Fact Sheet from HHS: Provides additional information and access to a list of approved employers in your state.
  • ERRP.gov - Visit this site if you are an employer interested in participating in the Early Retiree Reinsurance Program.

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