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HHS touts reform insurance program for early retirees
President Obama’s health department has paid out more than a half-billion dollars in health benefits to a temporary early retiree insurance program included in the healthcare reform law, the department announced Wednesday morning.
As of Dec. 31, 2010, almost 5,500 employers covering 61,000 people had been accepted into the Early Retiree Reinsurance Program (ERRP), which reimburses plan sponsors for part of health insurance costs for early retirees – typically people between 55 and 65 – and their families.
The Department of Health and Human Services says the program is essential because individuals in that age range typically have trouble obtaining insurance in the individual market. The program reimburses enrollees at an equivalent of 80 percent of the actual costs of health expenses between $15,000 and $90,000.
The majority of the ERRP sponsors represent state and local government employees (47 percent), followed by employees of commercial (27.5 percent), nonprofit (15.1 percent), union (10 percent) and religious (0.4 percent) organizations.
According to the HHS report, the department had paid out $535 milion by the end of 2010. Twenty percent of plans will use the ERRP reimbursements to reduce the sponsor’s health benefit or premium costs, 20 percent will use the money to reduce offset increases to plan participants' premium and other healthcare costs, and 60 percent will use the money for both.
HHS said the temporary program, which ends in 2014 when new state insurance exchanges open, is necessary because large firms had been increasingly dropping retiree healthcare coverage before Medicare eligibility kicks in.
"The Early Retiree Reinsurance Program is helping to control health care costs and protect coverage for early retirees and their families," HHS Secretary Kathleen Sebelius said in a statement. "This program is providing critical financial relief to help states, private employers and other organizations preserve access to affordable health coverage for millions of Americans."
