Employers, unions getting $5 billion for early retirees' coverage
■ The program, part of the health system reform law, serves as a bridge until new insurance exchanges are in place in 2014.
By Chris Silva — Posted Sept. 15, 2010
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Washington -- The Obama administration has accepted a group of employers into a new program geared to help them better afford health insurance coverage for their workers who retire before they are covered under Medicare.
The Dept. of Health and Human Services on Aug. 31 announced a first round of applicants to be accepted into the Early Retiree Reinsurance Program, which will provide $5 billion to employers and unions to help them maintain coverage for early retirees 55 and older who are not yet eligible for Medicare. The program is part of the new health system reform law and designed to serve as a bridge until the new health insurance exchanges are in place in 2014.
Businesses accepted into the program will receive reimbursement for medical claims for early retirees and their spouses, surviving spouses and dependants. Savings can be used to reduce health care costs and provide premium relief to workers and their families.
"In these tough economic times, it is difficult for employers to keep up with skyrocketing health care costs for employees and retirees," said HHS Secretary Kathleen Sebelius. "Many Americans who retire before they are eligible for Medicare see their life savings disappear because of medical bills and exorbitant rates in the individual health insurance market."
HHS' Office of Consumer Information and Insurance Oversight has approved nearly 2,000 employer health plans, representing a range of employers from all 50 states and the District of Columbia. Employers can submit claims dating back to June 1, 2010.
The program has received support from some lawmakers.
"[It] will provide much-needed support to help employers in Montana and across the country afford to continue providing health care benefits to retired workers," said Senate Finance Committee Chair Max Baucus (D, Mont.).
The retiree program ends Jan. 1, 2014, when state health insurance exchanges are slated to be up and running.
Individuals and small businesses will be able to buy insurance directly from an exchange, which HHS describes as "a new transparent and competitive insurance marketplace" that will offer qualified health benefit plans. The exchanges are designed to offer plans largely for people who don't get coverage through their jobs or from public programs.