Reinsurance Program for Early Retirees

On June 23, 2010 the Early Retiree Reinsurance Program of the Patient Protection and Affordable Care Act (PPACA) PPACA became effective. The program ends the earlier of January 1, 2014 or when program funds are exhausted.

The early retiree reinsurance program provides $5 billion for temporary financial help for employer plans to continue to provide valuable coverage to certain retirees

Payments will be made to sponsors of employer-sponsored health plans on behalf of an early retiree (and his or her spouse, surviving spouse, and dependents). An "early retiree" is defined as an individual age 55 and older that is neither an active employee nor eligible for Medicare and is covered under an employer-sponsored early retiree health plan.

For each early retiree (and his or her spouse, surviving spouse, and dependents), the employer plan may receive up to 80% of costs, minus negotiated price concessions, for health benefits between $15,000 and $90,000. Plans must use these proceeds to lower health costs for enrollees (e.g., premium contributions, copayments, deductibles, etc.).

To receive assistance, plans must apply to the program and receive approval by Health and Human Services (HHS). Applications are reviewed and approved or denied on a first-come-first-served basis.

Employers who extend group health insurance to their pre-Medicare retirees and wish to apply to the program, can find more information at the following link: http://www.hhs.gov/ociio/regulations/errp/index.html.

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