Early Retiree Reinsurance Fact Sheet

Early Retiree Reinsurance Fact Sheet

The Patient Protection and Affordable Care Act (PPACA) provides for the establishment of a temporary reinsurance program for early retirees designed to reimburse participating employment based plans for certain costs related to covering early retirees and their dependents.

The program is available to both fully insured and self-funded groups.
$5 billion was appropriated to fund this program on a first come, first served basis.

Key Dates

  • Effective June 1, 2010
  • Applications available in June – date not yet determined by the Department of Health and Human Services (HHS)
  • Applications will be accepted until funding runs out
  • Expires January 1, 2014, or when funding runs out

The HHS will use its website as the primary communications vehicle regarding the Early Retiree program. Visit http://www.hhs.gov/ociio/for information, and to submit an application. Employers and brokers should check this site regularly as no specific dates have been established for when applications and procedures will be available.

Definition of Early Retiree

  • Age 55 or older
  • Cannot be eligible for Medicare
  • Cannot be an active employee of an employer that maintains or contributes to the plan
  • Can be a spouse, surviving spouse, or other dependents

Reimbursement Parameters

  • Participating employer based plans can receive reimbursement for claims more than $15,000 but not exceeding $90,000 on an aggregate basis per retiree.
  • The employer is reimbursed 80% of the submitted costs if the claim is approved for payment.
  • Claims must be incurred and paid to be submitted.
  • Claims must reflect the actual amount paid by the plan for the plan year, and also costs paid by the retiree, such as copays and deductibles.
  • Claims must take into account any negotiated discount, rebate or other remunerations.
  • Health benefits include major medical benefits including medical, surgical, hospital, drug and other types of claims as determined by the Secretary.
  • Health benefits do not include limited benefits such as accident, disability, worker's compensation or coverage for a specific disease.
  • Reimbursement must be used to lower costs of the plan or to reduce premiums or cost sharing. Lowering of costs can apply to all participants of an employer’s health plan, not just early retirees.

NOTE: Year 1 claims are treated differently for plans with plan year effective dates between June 1, 2009 and June 1, 2010. For claims incurred up to June 1, 2010, up to $15,000 will count as a credit, but those that exceed $15,000 prior to June 1, 2010 will be excluded. For clams incurred between June 1, 2010 and end of the plan year, the 80% will apply.

Early Retiree Reinsurance Fact Sheet

  • For more information on the application visit: excellusbcbs.com/healthreformB-3264 / 4508-10M

Eligibility Requirements

  • Must be an employment-based plan defined as a group health plan providing health benefits and maintained
    by one or more current or former employers, an employee organization, a VEBA, or a multi-employer plan.
  • Plans must have programs in place to generate cost savings for members with chronic and high cost conditions
    to be eligible.
    – Chronic/high cost conditions are defined as those in which $15,000 or more in health benefits claims are likely to be incurred per plan year by any one participant.
    – Plans are not expected to put in new programs nor are they expected to have programs in place for all
    possible chronic conditions.
    – Sponsors must make records available and/or have an agreement in place with the health insurer to make records available.
  • The employer based plan must agree to maintain funding level to support their plan(s.)
  • The employer based plan may be audited on these provisions and must make records available for
    audit purposes. Records must be maintained for six years.
  • Employment based plan must be certified by the Secretary. One application is required for each plan.

Application Process

The employer is required to submit an application which will be reviewed and approved on a first come
first serve basis.

• Incomplete or incorrect applications must be re-submitted and will be reviewed based on the date the
corrected application is received.
• A plan sponsor must be identified who will apply for and receive reimbursement under the program.
• An authorized representative must sign a plan sponsor agreement to comply with the terms and conditions
for participation in the program.
• Approved applications do not have to be renewed each year.

Primary Employer Application Requirements

• A list of all benefit options under the employment based plan for which reimbursement may be claimed.
• A 2 year reimbursement projection.
• An explanation of how reimbursement will be used to reduce health benefit plan costs.
• An attestation that programs are in place to detect and reduce fraud, waste and abuse.
• Overview of procedures or programs the sponsor has in place to manage costs for chronic and
high cost conditions.
• Assurance of an agreement between the plan sponsor and the insurer that claims information
will be submitted by the insurer to the Secretary.

Reimbursement Process

• Reimbursement is made to the employer and must be used to reduce health care costs.
• Employers are expected to submit documentation for reimbursement; for insured plans, the insurer
may submit documentation directly to the Secretary.
• Negotiated price concessions must be excluded from the calculation of reimbursement.
For those that are incurred post-point of sale, the reimbursement may be re-opened and revised.
• To include costs paid by the retiree (e.g., deductibles), evidence that such costs were paid must be
submitted by the employer (EOBs are not acceptable). If this information is not submitted, the
employer may still be reimbursed for the remainder of the claim.
• For HMO plans, the sponsor is required to ensure the insurer provides the information needed for the claims.

For more information on the application visit: excellusbcbs.com/healthreform

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