Recent News

May 28, 2010

Early Retiree Reinsurance Facts

~ written by Char Sutek, Employee Benefits, Willis

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

Effective Date
The program becomes effective June 23, 2010. Payments are retroactive for a plan year, so employers and early retirees will be able to take advantage of them for costs incurred from the date the program is established. The program ends on January 1, 2014, when early retirees will be able to choose from the additional coverage options that will be available in the health insurance exchanges.

Who Qualifies
Payments will be made to 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 who is neither an active employee nor eligible for Medicare.

Eligible Firms
Payments will be made to employer-sponsored health plans on behalf of early retirees. To receive assistance, plans must apply, document claims, and implement programs and procedures to generate cost savings for participants with chronic and high-cost conditions. Plans will be subject to audits to assure fiscal integrity.

Amount of Assistance
For each such early retiree (and his or her spouse, surviving spouse and dependents), the employer plan will receive up to 80 percent of costs, minus negotiated price concessions, for health benefits between $15,000 and $90,000. This reinsurance corridor shall be adjusted in subsequent fiscal years by the medical component of the consumer price index.

Savings for Enrollees
Plans must use these proceeds to lower health costs for enrollees (e.g., premium contributions, copayments, deductibles, etc.).

Have questions on the new reform law? Contact Char Sutak at 614/326.4907 or char.sutak@willis.com.