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June 29, 2010 Tuesday 04:16 PM EST
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Application Window Open for $5 Billion Federal Program for Early Retiree Coverage
Jesse A Hamilton
WASHINGTON
The U.S. Department of Health and Human Services said it is now accepting applications from employers who want to take advantage of a $5 billion federal program to bolster health coverage for early retirees. Employers can send applications to HHS’ Office of Consumer Information and Insurance Oversight. This program was created under the recent health reform act, helping employers keep retirees older than 55 covered until their Medicare kicks in. It’s meant as a bridge to foster coverage until insurance exchanges are put into place in 2014. In the program, employers who offer health coverage to pre-Medicare retirees can potentially get a portion of it paid for. Hewitt Associates, a benefits administrator, surveyed 245 companies last month about their intentions. Of those employers surveyed, 76% planned to apply for help under this Early Retirement Reinsurance Program, the survey said. For a company with 1,000 such retirees, the benefit could be $2 million to $3 million a year, according to Hewitt (BestWire, May 26, 2010). All employers who provide health insurance for early retirees — including governments and unions — can apply, according to HHS. The businesses would be reimbursed for as much as 80% of medical claims costs for cumulative benefits between $15,000 and $90,000 value, and the programs officials start date is considered to be June 1. Insurers will be permitted to submit claims on behalf of participating plan sponsors, potential putting insurers in the role of administrative go-between.The program is set to expire when it runs through its $5 billion, so its life span will depend on its popularity. According to HHS, the number of pre-Medicare retirees provided with coverage by large firms has declined from 66% in 1988 to 31% in 2008 (BestWire, May 6, 2010). (Jesse A. Hamilton, Washington bureau manager: Jesse.Hamilton@ambest.com)
June 30, 2010
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