On Wednesday, May 5, 2010, the Department of Health and Human Services (HHS) released an Interim Final Rule (available at http://www.hhs.gov/ociio/regulations/gate.pdf ) implementing the Early Retiree Reinsurance Program established under the Patient Protection and Affordable Care Act (referred to as The Affordable Care Act).
This program will reimburse participating employer-based plans for a portion of the cost of health benefits provided to early retirees age 55 and older who are not eligible for Medicare and their spouses and to surviving spouses and their dependents. Both self-funded and insured plans can apply, including plans sponsored by private entities, state and local governments, nonprofits, religious entities, unions, and other employers.
Initially the program will reimburse plans up to 80% of claim costs between $15,000 and $90,000 with those amounts indexed for plan years beginning on or after October 1, 2011. Claims incurred between the start of the plan year (often January 1) and June 1st will be credited towards toward the $15,000 threshold for reimbursement. However, only medical expenses incurred after June 1, 2010 are eligible for reimbursement under this Program.
In order to participate, a sponsor’s employer-based plan must be certified by the Secretary of HHS and must include programs and procedures that have generated or have the potential to generate cost-savings with respect to plan participants with chronic and high-cost conditions. The Rule refers to a diabetes management program that includes aggressive monitoring and behavioral counseling to prevent complications and unnecessary hospitalization as a program that would qualify for certification under the Program.
Sponsors wishing to participate in the Program must submit an application to HHS and will not be eligible for reimbursement under the Program until the application is approved. The application form is not yet available, but will be available by the end of June, 2010. Applications will be processed in the order received. Applicants must sign a sponsor agreement and comply with HIPAA privacy requirements in submitting their applications. Since funding is initially limited to $5 billion, plan sponsors should submit applications without undue delay, since HHS will likely stop accepting applications once total projected reimbursements reach the funding limit of $5 billion. Once approved, a plan’s claims for reimbursement will also be paid in the order received.
