It’s been nearly six months since HHS opened the early retiree reinsurance program for employers who provide health insurance benefits to their retirees who are not yet eligible for Medicare. By the end of August, 2000 employers had been added to the program, and HHS noted that the program was off to a very good start. By the end of October, there were 3600 employers in the early retiree reinsurance program, but a Robert Wood Johnson Foundation report indicates that the majority of employers who offer retiree health insurance benefits have not yet signed up for the program, scheduled to last until the end of 2013. The RWJF study notes that in addition to the many small employers who offer retiree health insurance benefits, there are also about 24,000 large employers who do so. Obviously, most employers have not enrolled in the early retiree reinsurance program yet, and it’s unclear whether they plan to do so or not.
Although some employers may simply not be aware of the program, the RWJF study noted a few reasons why employers may have chosen not to apply for the program: Some employers (although not that many) have health plans that are not eligible based on the guidelines set by HHS. Other employers might have decided that the effort required to apply isn’t worthwhile. The program kicks in if an early retiree has more than $15,000 in medical expenses, but employers with skimpy benefits might not be providing coverage beyond that level to begin with, and others might feel that the likelihood of their retired employees needing extensive care isn’t great enough to warrant applying to the ERRP. Lastly, some employers might not have much of a financial incentive to apply if they don’t contribute to their early retirees’ health insurance costs. In that case, the financial benefits would go to the retirees rather than the employer, even though the employer would be the one having to enroll in the program.
The Employee Benefit Research Institute (EBRI) believes that the $5 billion allocated to the early retiree reinsurance program will be exhausted by the end of next year, and the CBO expects the funds to dry up part way through 2012. But the RWJF study notes that if employer participation remains low relative to the number of eligible employers, the money may last longer.
For employers who are interested in applying to the early retiree reinsurance program, the ERRP website has an extensive list of answers to common questions about the program.
