Healthcare Reform ERS


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Read how an Early Retiree Subsidy Program works, including eligibility and the application process.

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Healthcare Reform ERS

  1. 1. HEALTHCARE REFORM 2010 Early Retiree Subsidy Program
  2. 2. Overview of the EARLY RETIREE SUBSIDY PROGRAM enacted as part of the PATIENT PROTECTION AND AFFORDABLE CARE ACT • On March 23, 2010, the Patient Protection and Affordable Act was signed into law. Included in this health insurance reform law is a provision that established the Early Retiree Subsidy Program. • The Early Retiree Subsidy Program provides reimbursement to participating sponsors for a portion of the costs of providing health coverage to early retirees who are between the ages of 55 and 65 (and eligible spouses and dependents of such retirees). • The law requires the Secretary of Health and Human services to establish a program within 90 days of enactment, which is June 23, 2010. We expect the program to be established by June 1, 2010. The program will expire on January 1, 2014 and funding for the program is limited to $5 billion dollars.
  3. 3. Who is ELIGIBLE to receive the Subsidy Any retiree 55 to 65 year old whose healthcare spend exceeds $15,000 per year for both medical and prescription claims. The plan is eligible for up to 80% of the “excess costs” minus negotiated price concessions for health benefits between $15,000 and $90,000. The “excess costs” of spouses and dependents of early retirees will also qualify for the Early Retiree Subsidy. For example, if you had an early retiree with $45,000 in medical and prescription claims during the year, the Early Retiree Subsidy would be $45,000 - $15,000 x 80% = $24,000 reimbursement to the plan.
  4. 4. Application Process The Applicant (Health Plan) must submit an application to the Secretary HHS to participate in this program, which is signed by an authorized representative of the applicant who certifies that the information contained in the application is true and accurate to the best of the authorized representative’s knowledge and belief. An Applicant must submit an application for each plan for which it will submit a reimbursement request. In connection with each application the Applicant must submit the following: Applicant’s Tax Identification Number, Applicant’s name and address and Contact name, telephone number and email address. The Applicant must submit an assurance that the sponsor has a written agreement with its health insurance issuer or employment based plans regarding disclosure of information to the Secretary.
  5. 5. Application Process Continued The Applicant must submit an acknowledgment that the information in the application is being provided to obtain Federal funds and that all subcontractors acknowledge that information provided in connection with a subcontract is used for the purpose of obtaining Federal Funds. The Applicant must submit an attestation that polices and procedures are in place to detect and reduce fraud, waste and abuse and that the sponsor will produce the policies and procedures, and necessary information, records and data, upon request by the Secretary to substantiate existence of the policies and procedures and their effectiveness.
  6. 6. Application Process Continued A summary indicating how the applicant will use any reimbursement received under the program to meet the requirements of the program, including: How the reimbursement will be used to reduce health plan costs (copays, deductibles, out of pocket costs, etc.) What procedures or programs the sponsor has in place that have generated or have the potential to generate cost savings with respect to plan participants with chronic and high cost conditions How the sponsor will use the reimbursement to maintain its level of contribution to the applicable plan
  7. 7. Application Process Continued Projected amount of reimbursement to be received under the program for the first two plan year cycles with specific amounts for each of the two cycles. A list of benefit options under the employment based plan that any early retiree for whom the sponsor receives program reimbursement may be claimed. Any other information the Secretary requires.
  8. 8. QUESTIONS Contact Susan Schrembs at Premier Consulting Assoc. at 716-688-5600 Or Eric Singer at Part D Advisors at 888-207-6478