Temporary Reinsurance for Early Retirees

What is the Early Retiree Reinsurance Program, and how does it work?
The Early Retiree Reinsurance Program is a temporary program established by the U.S. Department of Health and Human Services (HHS) to assist employers with the cost of providing group health coverage to early retirees ages 55 and older who are not Medicare eligible. The program is effective until January 1, 2014, or until the $5 billion allocated to the program runs out. The program is intended to help employers maintain their early retiree coverage until the new exchanges become operational in 2014.

For companies that are accepted into the program, HHS will reimburse 80 percent of the cost of claims between $15,000 and $90,000 per year, per early retiree. These numbers will be adjusted annually based on the medical care component of the Consumer Price Index (CPI).
When did the program begin, and when will it end?
The program began accepting applications on June 29, 2010. Application forms are available at www.healthcare.gov.

The law has granted not more than $5 billion to carry out this program. The program will end as of January 1, 2014, or earlier if the funding runs out.
What determines a company's eligibility for this program?
To be eligible, companies must:
- Offer health care coverage to early retirees ages 55-64
- Submit an application to HHS that includes, among other information, a description of the cost-saving programs in place for covered members with chronic and high-cost health conditions
- Be able to provide documentation of the retirees' actual medical claim costs
- Have a written agreement in place with an insurer or group health plan regarding disclosure of data to HHS
How can companies use the proceeds from the program?
Reimbursements under the program will need to be used to lower the cost for the employer-based plan, including employer costs and retiree costs (e.g., premiums and cost-sharing). Employers cannot use proceeds under this program as general revenue.
How can companies participate in this program?
Companies must apply to HHS for participation in the reinsurance program and must be certified by HHS. HHS began accepting applications to the Early Retiree Reinsurance Program on June 29, 2010. Applications will be processed in the order they are received. Given the limited funding, employers should file applications as soon as possible.
Are claims paid prior to June 1, 2010 reimbursable?
No. To be eligible for reimbursement, claims must be incurred on or after June 1, 2010. If a plan year begins prior to June 1, claims incurred before June 1 may count toward the $15,000 threshold for the plan year, even though these claims are not eligible for reimbursement.
Can claims for early retirees' covered family members be reimbursed with program funds?
Yes. Companies paying claims for early retirees' spouses, surviving spouses, or dependents covered under the early retirees' health plan are eligible for the reinsurance program.
When can a company first submit claims?
Claims can be submitted only after HHS has certified the company for participation in the program, and after the $15,000 threshold has been met based on the actual plan payments. Guidance from HHS regarding the process and timing for claims submission is expected in the near future.
Does my company need to reapply each year?
No, not according to the interim final regulation.

This information is provided for informational purposes only and does not constitute legal advice. Please consult your legal counsel regarding your specific situation.

Please note that this content is only intended to describe national health care reform requirements under the Patient Protection and Affordable Care Act (PPACA). It does not address Massachusetts law requirements or the potential impact of Massachusetts law on federal PPACA requirements.

For purposes of PPACA implementation, Blue Cross Blue Shield of Massachusetts assumes the plan year is the policy year, unless an account notifies us otherwise.