New HHS Early Retiree Reinsurance Program Accepting Applications

Janice Simmons, June 30, 2010

The Department of Health and Human Services' new Office of Consumer Information and Insurance Oversight (OCIIO) began accepting applications on Tuesday for a program that gives financial relief for employers, unions, nonprofits, or state and local governments to provide coverage to early retirees—those age 55 or older who are not yet eligible for Medicare.

Under the Early Retiree Reinsurance Program (ERRP), which was created under the new healthcare reform law, $5 billion in financial assistance will be made available to help employers continue to provide health insurance to their younger retirees.

"Today, Americans who have retired but are not yet eligible for Medicare are often unable to find coverage that is affordable and meets their health needs on the individual market," said HHS Secretary Katherine Sebelius in a statement. "This program will help both retirees and employers facing spiraling healthcare costs, and ensure more Americans have access to the healthcare they need."

As healthcare costs have increased, it has become harder for employers to provide health insurance not only to their current employees but also their retirees, according to Sebelius. Recent surveys have found that over the past several decades, the percentage of firms offering retiree health insurance has dropped by more than half; by 2009, less than a third did so.

This program has been designed to provide employer-based health coverage until insurance plans are made available through health insurance exchanges in 2014.

The reinsurance program will reimburse employers for medical claims for younger retirees who are not eligible for Medicare, along with their spouses, surviving spouses, and dependents. The reimbursements will be available for 80% of medical claims costs for health benefits between $15,000 and $90,000. Those participating in the program will be able to submit claims for medical care beginning from June 1, 2010.

According to a new Hewitt Associates retiree benefits survey, many employers are likely to be looking to use "new cost management opportunities" in relation to pre-Medicare retiree benefits. Of the 242 employers Hewitt surveyed earlier this year that provide coverage to 1.3 million retirees and their families, 77% said they plan to apply for the temporary federal reinsurance program intended to help younger retirees.

However, nearly two-thirds of such companies are unsure on how they will use these proceeds to reduce employer and retiree costs and are waiting for guidance before reaching a decision. About half (54%) of respondents said they plan to make changes to their benefits strategy to leverage the health insurance exchanges that states are required to create in 2014.

Applications for ERRP, as well as fact sheets and application assistance, can be found at:

Janice Simmons Janice Simmons is a senior editor and Washington, DC, correspondent for HealthLeaders Media Online. She can be reached at
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