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CMS on Track to Use Up Early Retiree Program Funding

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The Centers for Medicare and Medicaid Services says it will stop accepting applications for the Early Retiree Reinsurance Program in May because of lack of availability of funds.

CMS plans to publish a notice about the change Tuesday in the Federal Register.

The ERRP, created by the Patient Protection and Affordable Care Act (PPACA), is supposed to reimburse eligible employers for part of the cost of providing health coverage for retirees ages 50 to 64 and for those early retirees’ eligible spouses, surviving spouses and dependents.

ERRP is supposed to help the early retirees get and keep coverage from now until 2014, when other PPACA provisions are supposed to require health carriers to sell coverage to all consumers, including early retirees, on a guaranteed-issue, mostly community-rated basis.

If PPACA provisions take effect as written and work as backers hope, carriers will be able to charge older consumers more than they charge younger consumers, but they will not be able to use an individual’s health status when deciding whether to issue coverage or when setting rates.

Congress appropriated $5 billion in funding for ERRP, and CMS started taking applications in June 2010.

CMS officials now believe they have approved enough ERRP applications to exhaust program funding, according to a temporary version of the ERRP notice.

Employers will have until 30 days after the publication of the Federal Register notice to submit additional ERRP applications, officials say.

“Should circumstances related to the availability of ERRP funding change, we may decide it is appropriate to resume accepting ERRP applications,” officials say. “If this occurs, we will provide such notice in the Federal Register.”

Comments on the change will be due 30 days after the official Federal Register publication date.

Other early retiree coverage from National Underwriter Life & Health:


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