Reading the original Senate version of health care reform, it appears that under the $5 billion early retiree reinsurance program only plan participants can benefit. This would mean no incentive for employers to participate (receiving the money will be time consuming). However, recently released regulations by HHS make it clear there are benefits for both employer plan sponsors and for early retiree participants. HHS is rushing to implement the program effective June 1 and remember, it is first come first served, once the money runs out it’s gone (at least until Congress finds more money to extent the program to avoid bad PR before 2014).
Following are excerpts from the HHS release (I have added the bold to certain text):
People in the early retiree age group often face difficulties obtaining insurance in the individual market because of advanced age or chronic conditions that make coverage unaffordable and inaccessible. The Early Retiree Reinsurance Program provides needed financial help for employer-based plans to continue to provide valuable coverage to plan participants, and provides financial relief to plan participants. The Early Retiree Reinsurance Program provides reimbursement to participating sponsors for a portion of the costs of providing health coverage to early retirees (and eligible spouses, surviving spouses, and dependents of such retirees).
Section 1102(a)(2)(B) of the Affordable Care Act defines “employment-based plan” to include a group benefits plan providing health benefits that is maintained by private employers, State or local governments, employee organizations, voluntary employees’ beneficiary association, a committee or board of individuals appointed to administer such plan, or a multiemployer plan (as defined by Employee Retirement Income Security Act or ERISA). Section 1102 does not differentiate between health benefits provided by self-funded plans or through the purchase of insurance.
Use of Reimbursements (§149.200)
Section 1102(c)(4) requires that the reimbursement “shall be used to lower costs for the plan. Such payments may be used to reduce premium costs for an entity” receiving a reimbursement or to reduce premium contributions, co-payments, deductibles, co-insurance, or other out-of-pocket costs for plan participants. We encourage sponsors to use their reimbursement under the program for both of the following purposes: (1) To reduce the sponsor’s health benefit premiums or health benefit costs, and (2) To reduce health benefit premium contributions, co-payments, deductibles, coinsurance, or other out-of-pocket costs, or any combination of these costs, for plan participants. We expect that sponsors will continue to provide at least the same level of contribution to support the applicable plan, as it did before this program. For example, for a sponsor that pays a premium to an insurer, if the premium increases, program funds may be used to pay the sponsor’s share of the premium increase from year to year, which reduces the sponsor’s premium costs. Section 1102(c)(4) sets forth the requirements for use of reimbursements under this section and envisions a role for the Secretary in developing a mechanism to monitor the appropriate use of such reimbursements. Additional information about this mechanism will be disseminated as it is developed.
QUINNSCOMMENTARY 