Reimbursement application forms enabling employers to be partially repaid for costs associated with reinsuring early retirees will be available before June 23, 2010. This temporary cost assistance program was instituted as part of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148), the health care overhaul legislation signed into law on March 23. According to a fact sheet (pdf), the early retiree reinsurance program provides $5 billion for temporary financial help for employer plans that continue to provide health coverage to “early retirees,” defined as an individual age 55 and older who is neither an active employee nor eligible for Medicare. Funds will be available until the earlier of 2014 or the $5 billion is depleted. These plans can receive reimbursement for a portion of medical, surgical, hospital, and prescription drug costs. Such payments will be excluded from gross income, but must be used to lower health costs for enrollees.

As stated in the fact sheet, employer plans are eligible to receive up to 80 % of costs, less negotiated price concessions, for health benefits between $15,000 and $90,000. The program begins June 23, 2010, and ends January 1, 2010, when the health insurance exchanges become available. Payments will be retroactive for the plan year.

In order to participate in the program, employer and union-based plans will submit the soon-to-be-released application to the Department of Health and Human Services (HHS). Once approved, the plans may submit paid claims to the HHS. To receive assistance, plans must also implement programs and procedures to generate cost savings for participants with chronic and high-cost conditions. Self-funded and insured plans are eligible to participate, including plans sponsored by private entities, state and local governments, nonprofits, religious entities, and unions.

A copy of the reimbursement application will be posted when it becomes available.

This entry was written by Ilyse Schuman.

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