Early Retiree

Early Retiree Reinsurance Program
At a Glance
ERRP Reimbursement Information
Application Requirements
Change of Business Ownership

Early Retiree Reinsurance Program

Many employers cannot afford to provide quality, affordable health insurance for workers and retirees. Americans who are 55-65 years of age who retire without employer-sponsored insurance may find themselves having to spend their life savings to pay for health insurance on the individual market until they’re eligible for Medicare.

Beginning in June 2010, the Affordable Care Act authorized the Early Retiree Reinsurance Program (ERRP) to reimburse approved employment-based health plans for a portion of the costs of health benefits for early retirees, their spouses, surviving spouses, and dependents.

At a Glance

Definition of an Early Retiree:

Age 55 or older
Not eligible for Medicare coverage
No longer an active employee of the employer maintaining the health plan
Enrolled for health benefits in the employer’s health plan
In the regulation, spouses, surviving spouses, and dependents of such retirees are also considered “early retirees.”[i]

Note: Retirees cannot apply for this program themselves. The ERRP helps employers pay some costs of early retirees’ health insurance claims. The program does not make payments to or insure retirees directly.

Click on the following for more information:

ERRP Reimbursement Information
Application Requirements
Change of Business Ownership Requirements
Additional Resources

ERRP Reimbursement Information

Approved ERRP sponsors can submit reimbursement requests for claims ranging between $15,000 and $90,000 that were incurred and paid during a plan year. The plan sponsor may include the portion of the claims paid by the health plan and by the early retiree. This includes claims for each early retiree as well as claims for their spouse, surviving spouse and dependents. The Department of Health and Human Services (HHS) will review and apply a formula to these requests to determine if they are eligible for reimbursement of 80% of paid costs.

Reimbursements must be used to reduce any combination of these costs:

the sponsor’s health benefit premiums or health benefit costs
the plan participant’s health benefit premium contributions, copayments, deductibles, coinsurance, or other out-of-pocket costs

Application Requirements

To be approved for the ERRP, the Plan Sponsor must submit an application to the Secretary of HHS. The plan and the sponsor must be certified and the application must be approved.

Although the scope of sponsors eligible for certification is extremely broad, employment-based plans are required to implement programs and procedures to generate cost-savings with respect to participants with chronic and high-cost conditions, and they must submit projections of reimbursement amounts for the first two plan year cycles.

Specific information about these requirements and a link to the ERRP application is available at http://www.errp.gov/how_to_apply.shtml.

Change of Business Ownership

The plan sponsor must notify the Secretary of HHS 60 days in advance of certain changes in business ownership or structure such as:

The removal, addition, or substitution of a partner (some exceptions apply)
Transfer of all or substantially all of the assets of the sponsor to another party
Corporate mergers resulting in a new corporate body

The existing sponsor agreement is automatically assigned to the new owner when a change of business ownership results in a transfer of liability for health benefit costs.[ii]

Additional Resources:

Early Retiree Reinsurance Program Website

Detailed information about the ERRP can be found at http://www.errp.gov/

List of Approved California ERRP Sponsors

The Department for Health and Human Services (HHS) updates the list of approved ERRP sponsors monthly. Click here for a list of approved ERRP sponsors in California. [insert link: http://www.healthcare.gov/law/provisions/retirement/states/ca.html]

[i] US Department of Health and Human Services. (2010, August 10). Early retiree reinsurance program overview presentation. Retrieved from www.errp.gov/download/earlyretiree_slides2010_08_10.pdf - 2010-06-01

[ii] US Department of Health and Human Services. (n.d.). ERRP Regultions. Retrieved from www.errp.gov/ociio/regulations/gate.pdf.

San Diegans for Healthcare Coverage, A Coalition for Health