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HHS: Costly Early Retiree Numbers Vary

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Early Retiree Reinsurance Program (ERRP) figures show that the number of early retirees with annual covered costs over $15,000 is much higher for some large plan sponsors than for others.

The U.S. Department of Health and Human Services (HHS) included costly early retiree figures in a report on ERRP implementation and operations.

Section 1102 of the Patient Protection and Affordable Care Act (PPACA), part of the Affordable Care Act package, created the ERRP to provide $5 billion in subsidies for employers that offer health benefits to early retirees ages 55 and older who are not eligible for Medicare and for those early retirees’ dependents.

The unions and employers that participate in ERRP must have programs for handling plan participants with chronic and high-cost conditions, HHS officials say.

ERRP provides reimbursement for 80% of an individual’s actual health expenses between a $15,000 cost threshold and a $90,000 cost ceiling. Plans can use the cash to reduce the sponsors’ costs, the participants’ costs or both.

HHS has approved ERRP applications from about 5,500 employers and unions.

The 253 plans that received ERRP payments in 2010 had millions of enrollees and 60,859 early retiree enrollees with more than $15,000 in health care expenses.

A table listing the 8 plan sponsors with the highest 2010 ERRP costly early retiree counts shows that some of the plan were much more likely to have high-cost early retirees than others.

High-cost early retiree rates ranged from 0.5 high-cost early retirees per 100 total plan participants, including active workers, for government employee plans in California, New Jersey and Texas, to 1.4 high-cost early retirees per 100 total plan participants for the United Auto Workers Retiree Benefits Trust. The Commonwealth of Kentucky had 1.1 high-cost early retirees per 100 total plan participants.