The recently passed Patient Protection and Affordable Care Act includes an early retiree reinsurance program available to groups that provide medical coverage to early retirees and their spouses, surviving spouses and dependents. This temporary program will provide $5 billion to help employers to continue to provide coverage to retirees ages 55 to 64.
The program provides for reimbursement of an early retiree's (and covered dependents') health care claims in an amount equal to 80% of the costs between $15,000 and $90,000. The employer is then expected to use the reimbursement to help lower health care costs (such as premium contributions, copays and deductibles) for participating enrollees.
This program is expected to be effective from June 1, 2010, to January 1, 2014. After January 1, 2014, retirees will have additional coverage options through the health insurance exchanges and federal subsidies for coverage.
Both self-insured and fully insured employer groups that offer early retiree coverage can apply, including plans sponsored by private entities, state and local governments, nonprofits, religious entities, unions, and other employers. To participate in the program, employers must first submit applications to the Department of Health and Human Services, which is expected to make the application available in the coming weeks. We'll share a link to the application when it becomes available.