The Centers for Medicare and Medicaid Services (CMS) will stop accepting applications for its Early Retiree Reinsurance Program after May 5 due to lack of funding.
The Early Retiree Reinsurance Program (ERRP) was designed as a temporary program to help employers provide retirement coverage to early retirees. Employers who are accepted into the program receive reinsurance reimbursement for retirees (and dependents and spouses) aged 55 and older who are not eligible for Medicare.
To date, it has provided more than 1,300 employers with $1.8 billion in reimbursements.
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According to CMS, the program received an overwhelming response, but has to stop accepting applications in accordance with the law's guidance on availability of funding.
"We are thrilled with the success of the Early Retiree Reinsurance Program and excited that we are helping maintain coverage and moderate costs for millions of American workers and retirees," said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight (CCIIO) at CMS in a press release. "Insurance for older Americans is over four times more expensive than coverage for young adults and we are happy that this program is helping employers maintain coverage."
The ERRP was established as part of the Affordable Care Act. A report released by CMS showed that 97 percent of the funds distributed were used to help reduce health insurance costs for retirees and their families.
The report also details reimbursements received by participating plan sponsors. Most of the individual ERRP payments made in 2010 were for less than $1 million, and 43 percent of individual payments were for less than $100,000.
In addition to the smaller payments, larger plans covering millions of retirees received reimbursements that have supported the plan as they worked to maintain coverage and control costs. One large employer reported that ERRP reimbursements provided a 3 percent premium discount for retirees, saving as much as $200 million.
"Health care costs are one of the most daunting challenges to the long-term growth and success of businesses," said Richard Popper, director of Insurance Programs at CCIIO. "This program makes sure that no matter who you worked for, a large or small company, your former employer has the resources necessary to keep you covered."
Employers and unions interested in the Early Retiree Reinsurance Program should visit www.ERRP.gov or call 1-877-574-3777. More information about the ERRP, including an alphabetical list of participants, and an interactive map displaying participants by state, is available online.
A downloadable application for plan sponsors interested in applying before the May 5 deadline is available here.
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