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Early Retiree Reinsurance Program

early-retiree

The Early Retiree Reinsurance Program (EERP) was designed in 2010, a program which reimbursed employers paying for non-Medicare eligible retired employee’s health care coverage. The Affordable Care Act implemented EERP in June of 2010 as an incentive for employers to continue coverage for people in the 55 to 64 age ranges, many of whom faced exorbitant premiums in the individual market. The program allowed employers to receive reinsurance reimbursement for specific health benefits, including hospitalizations, prescription drugs, and mental health services. This reimbursement total reached as much as 80% in cases, bringing relief to employer and retiree alike. As a result of EERPreimbursements, coverage was able to be extended to people who could have otherwise faced financial devastation due to a lack of coverage.

The Affordable Care Act gave qualified employers the ability to apply for the program, which many did including both those with self-funded plans as well as fully insured companies. The funds could be used at the employer’s discretion to reduce their own health costs or provide payment assistance to the worker, as many workers were required to pay a portion of the monthly premium.The employer would have to demonstrate that reimbursements were appropriately distributed in one of the following manners:

  • Used to offset premium costs or
  • Used to reduce cost sharing, such as co pays, deductibles, or coinsurance or
  • A combination of both

The EERP plan was quickly utilized. However, this resulted in the $5 billion allotted for the program being depleted at a rapid manner. Therefore, the program was closed in May of 2011 and only paid claims through December of 2011 (plan sponsors do have until December 31, 2014 to use their EERP funds). http://www.errp.gov/

It was expected that the program would have carried well into 2014 when there would be more health options for said individuals. Sadly, this program did not reach its goal. However, it is hoped that with the premium ratio being reduced to 3:1, meaning that someone in their 60’s will not pay more than three times that of someone in their 20’s, premiums for older citizens will be more manageable and easier for employers and employees alike to handle.

While the EERP program is no longer an option, Health Exchange Quote can assist you with any questions on small and large business plans. Our agents are experts in finding the best coverage with the lowest cost exposure for employers and employees alike. Call us today!!

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