The Department of Health and Human Services has begun accepting applications under the Early Retiree Reinsurance Program (ERRP), designed to give relief to early retirees and their former employers.
The $5 billion program reimburses employers for a limited amount of the medical claims of retirees ages 55 and older who are not eligible for Medicare, including claims of the retirees’ spouses, surviving spouses and dependents. The temporary program, which ends when the money runs out but no later than Jan. 1, 2014, reimburses health plan sponsors for certain claims between $15,000 and $90,000, says Janet Josway, vice president of the Employee Benefits Consulting Group at Aon Risk Services.
“The purpose of the reimbursement is to make health benefits more affordable for plan participants and sponsors so that health benefits are accessible to more Americans than they would otherwise be, providing a financial incentive for employer-based plans to continue to provide coverage to early retirees,” says Josway.
Smart Business talked with Josway about how the ERRP may benefit both your business and your early retirees.
Are applications for the program accepted on a first-come, first-served basis?
For the ERRP, it’s important to make the distinction between the application process and the claims process, which operate separately. All qualified applications will be approved. Applications will be processed in the order in which they are received.
Payments are made based on when claims are submitted, not when applications for the program were submitted. All employers who are accepted into the ERRP are eligible to receive reimbursement for costs incurred on or after June 1, regardless of when the employer was accepted into the program. Once an employer is accepted, it can submit claims for its retirees. The U.S. Department of Health & Human Services is currently developing the infrastructure needed to accept claims data and reimbursement requests and will announce details of the process in the near future.
And while all qualified applications will be approved, the Department of Health & Human Services does have the authority to stop accepting applications if it appears that the $5 billion in federal funding is insufficient as program reimbursements are being paid out.
The application must be signed by an authorized representative. What are some examples of those who have that legal authority?
Examples of those who have authority to serve as an authorized representative for a sponsor include the sponsor’s CEO, CFO, president, human resources director and general partner. For plan sponsors that are union, a member of the union fund’s board of trustees would typically have the required authority.
Others may also qualify, but keep in mind that the authorized representative and the account manager mentioned in the application must be different individuals.
