Health Reform:  Early Retiree Reinsurance Program

Cox Smith Employee Benefits E-Alert 

Health Reform:  Early Retiree Reinsurance Program

Today the Department of Health and Human Services released interim final regulations explaining the workings of the governmental subsidies for early retiree health coverage. This is the first of many different regulations expected to be issued by HHS to flesh out provisions of the Patient Protection and Affordable Care Act.

The program will reimburse 80% of medical expenses of participants, their covered spouses and dependents between $15,000 and $90,000, for a total potential reimbursement of $60,000 per participant. The program begins June 1, 2010, although claims incurred in the current plan year but before June 1 may be counted toward the $15,000 threshold.
Reimbursements may be used to reduce: 1) premiums or other costs, such as deductibles or out of pocket costs, paid by participants, 2) premiums paid by the plan sponsor, or 3) a combination of the two. However, HHS "expects" that plan sponsors will not reduce their contribution as a result of the program.

Employers who provide health coverage to retirees from age 55 until qualification for Medicare should begin taking immediate steps to take advantage of the program. Applications are processed in the order of submission, and applications rejected for failure to comply with the requirements must be started over again. HHS expects the fixed appropriation of $5 billion for the program to run out, making time of the essence in submitting complete and accurate applications.

The applications not only require sponsors to provide a great deal of information but also to enter into information-sharing agreements with insurers or self-insured plans; adopt new policies and procedures to detect and reduce fraud, waste, and abuse; and establish cost-savings programs for patients with chronic/high cost health conditions. In addition, the regulations impose record-keeping requirements.

Please contact one of our employee benefits lawyers if you would like assistance in understanding the new rules of this program or preparing an application to participate.

The final and interim regulations are available by clicking on this link to the Federal Register: Department of Health and Human Services Early Retiree Reinsurance Program.

William M. Fisher
Katherine Patton Noll
Mary M. Potter
Joshua A. Sutin
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