One of the many provisions of Health Care Reform is the Early Retiree Reinsurance plan. Under this plan, employers who provide medical coverage to early (pre-Medicare) retirees are entitled to collect reimbursements for certain medical claims. The legislation has set aside $5 billion for funding this program and will end either when these funds are exhausted or at January 1, 2014, whichever is earlier. The Department of Health and Human Services (HHS) issued guidance on May 5, 2010 outlining the application process and program requirements. Some of the key components of this plan are:

• For each early retiree, spouse and dependent the employer plan can apply for reimbursement of up to 80% of costs, less negotiated price concessions, for benefits between $15,000 and $90,000 (adjusted annually by the medical component of the CPI).

• The effective date of the plan is June 1, 2010.

• Plans are required to use payments to 1) reduce the sponsor’s health benefit premiums or health benefit costs, 2) reduce health benefit premium contributions, copayments, deductibles, coinsurance or other out-of-pocket costs, or any combination of these costs for plan participants, or 3) any combination of the above. Proceeds under the program cannot be used as general revenue for the plan sponsor.

• Only claims are eligible for reimbursement, not premiums.

• Plans must, as part of the application process, become “certified” by HHS, implement design features to generate cost savings for participants with chronic or high cost conditions, agree to provide data and documentation to HHS and adopt policies and procedures to prevent fraud and abuse under the plan.

For more information, please see the link below that leads to the actual guidance released by HHS:

http://www.hhs.gov/ociio/regulations/gate.pdf

Due to the short-term, “first-come-first-served” nature of this program, UHAS encourages interested employers to get in front of this issue as quickly as possible. UHAS stands ready to assist any sponsor that wishes to pursue the reimbursements from this program. Please contact us if you have any questions.