The federal government is now accepting applications from employers
that want to get reimbursed for medical claims paid on behalf of early
The $5 billion Early Retiree Reinsurance Program, enacted as part of health reform, will repay employers for 80 percent of medical claims between $15,000 and $90,000 made on behalf of retirees who are 55 years and older but not yet eligible for Medicare.
The program will reimburse claims going back to June 1, 2010. As the Department of Health and Human Services notes in its press release, the fund was created as "bridge to the marketplace established by the Exchanges in 2014"-basically an incentive to keep employers from dropping early retiree health care.
The percentage of employers offering early retiree health benefits has been shrinking for years. Since 1993 the percentage of large employers offering arly retiree benefits has dropped to 29 percent from 43 percent. The average early retiree costs an employer an average of $7,600; only 13 percent of retirees had claims higher than $15,000.
Still, while $5 billion seems like a lot of money, the fund is expected to run out of cash way before 2014, according to research by the Employee Benefits Research Institute. EBRI reports that if the subsidies were used to cover all arly retirees and their dependents,half of the $5 billion would be exhausted in the first year alone.
It is unclear whether Congress will appropriate more money to help employers and unions that subsidize early retiree health care costs. Applications for the program can be found here.