New early re­tiree pro­gram in health­care law moved up to June 1

$5 bil­lion early re­tiree pro­gram now starts June 1

Modern Healthcare - - Modern Healthcare - Re­becca Ve­sely

The Obama ad­min­is­tra­tion moved up the time­frame to im­ple­ment an­other pro­vi­sion of the new health re­form law last week—this one aimed at ben­e­fit­ing em­ploy­ers who pro­vide health cov­er­age to early re­tirees.

The $5 bil­lion Early Re­tiree Rein­sur­ance Pro­gram will be­gin ac­cept­ing ap­pli­ca­tions from em­ploy­ers on June 1. The pro­gram will help off­set med­i­cal costs of re­tirees be­tween the ages of 55 and 64, their spouses and de­pen­dents. The pro­gram was slated to launch on June 21.

The pro­gram ends in 2014, when health cov­er­age will be­come avail­able through health in­surance ex­changes.

De­spite the short­ened im­ple­men­ta­tion time­frame, em­ploy­ers and cov­ered re­tirees likely won’t see fi­nan­cial re­lief un­til 2011 at the ear­li­est be­cause of the com­plex ad­min­is­tra­tive changes, said Milind De­sai, prin­ci­pal and ac­tu­ary at He­witt As­so­ci­ates, a hu­man re­sources con­sult­ing firm.

“I think it will be chal­leng­ing to make mod­i­fi­ca­tions to de­ductibles for this year,” De­sai said.

Em­ploy­ers can ap­ply for re­im­burse­ments of up to 80% of claim costs for health ben­e­fits be­tween $15,000 and $90,000. Only med­i­cal ex­penses in­curred af­ter June 1 are el­i­gi­ble for re­im­burse­ment, but claims in­curred af­ter Jan. 1 of this year can count to­ward the $15,000 thresh­old, the HHS said.

The num­ber of large em­ploy­ers who of­fer cov­er­age to early re­tirees has fallen sig­nif­i­cantly in the past two decades. Thirty-one per­cent of large em­ploy­ers of­fered these ben­e­fits in 2008, down from 66% in 1988, HHS said.

Among em­ploy­ers that still of­fer ben­e­fits, this new pro­gram is ex­pected to be pop­u­lar. About three-fourths of large em­ploy­ers pro­vid­ing early re­tire­ment health cov­er­age are in­ter­ested in ap­ply­ing, ac­cord­ing to pre­lim­i­nary sur­vey data from He­witt.

Many early re­tirees fall into a cov­er­age gap be­cause they are too young to qual­ify for Medi­care but can­not qual­ity for in­di­vid­ual in­surance be­cause of pre-ex­ist­ing med­i­cal con­di­tions. While this rein­sur­ance pro­gram does not aid older unin­sured Amer­i­cans, it aims to stop the steep drop-off in pri­vate early re­tire­ment health ben­e­fits.

The pro­gram is vol­un­tary, and em­ploy­ers can de­cide how they want to divvy up the funds. They could keep all the money for them­selves, or pass all or a por­tion of it onto early re­tirees in the form of lower premi­ums and other out-of­pocket costs. Em­ploy­ers must ex­plain how they in­tend to di­vide the fund­ing in their ap­pli­ca­tions to HHS, which will likely de­ter them from claim­ing all the money, De­sai said.

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