ERRP Will Sunset at Start of 2014

An announcement in the Federal Register details how operational processes will be impacted by this upcoming sunset date for the program and covers the:

• Date after which plan sponsors no longer must report changes to information in their ERRP applications;
• Date after which plan sponsors no longer must report change of ownership;
• Last date plan sponsors may submit reimbursement requests;
• Date after which plan sponsors are no longer required to submit corrections to data inaccuracies; and
• Last day plan sponsors may submit a request to reopen and revise an adverse reimbursement determination.

The ERRP was established in response to the Patient Protection and Affordable Care Act of 2010 (PPACA) in order to provide reimbursement to participating employment-based health plans. Specifically, the program has been reimbursing plan sponsors for 80% of the medical claims costs between $15,000 and $90,000 for early retirees (i.e., those that are age 55 to 64) who are not eligible for Medicare (see “What Are the Implications of the Early Retiree Reinsurance Program?”).

According to a 2011 report by the Government Accountability Office (GAO), about 46% of the $2.7 billion in ERRP reimbursements approved as of June 30, 2011, went to government entities. The GAO noted that government entities are more likely than other types of employers to provide health benefits to their retirees (see “ERRP Approvals Consistent with Provision of Benefits in Market”).

The termination of the program was expected, as it only had $5 billion allocated to it and once all funds had been paid out, no further allocations were scheduled (see “Early Retiree Reinsurance Program to End”).