The Obama administration has announced that it will offer employers of early retirees, who receive health coverage through their former employers, financial help with the cost of providing such care. The aim of the temporary $5 billion program, part of the new health care law, is to counteract the erosion of employer-sponsored health plans.
The federal government has pledged to reimburse employers for 80 percent of the cost of claims ranging from $15,000 to $90,000 a year for retired workers 55 or older and, therefore, not yet eligible for Medicare. The program will go into effect in June and will conclude on January 1, 2014. At that time, it is hoped, early retirees will be able to join millions of other Americans in new state-based insurance exchanges.
John Castellani, president of the Business Roundtable, which advocates for large employers, applauded news of the program, stating that it would make health benefits more affordable for both early retirees and employers.
Early retirees, said Health and Human Services secretary Kathleen Sebelius, “often face difficulties obtaining insurance in the individual market because of advanced age or chronic conditions that make coverage unaffordable.” She predicted that 4,500 employers, 3,000 private entities and 1,500 state and local governments, would receive federal assistance under the program.