Inside the Retiree Reinsurance Program

June 15, 2010 ( - The Patient Protection and Affordable Care Act ("PPACA") creates a program designed to help employers with the costs associated with providing retiree health benefits to early retirees who are not yet eligible for Medicare. 

Congress allocated $5 billion to reimburse plan sponsors for certain retiree health claims (see Early Retiree Health Subsidy Program Take-up Could be High).  However, when the funds are expended, the program is over (see EBRI Sees Retiree Health Coverage Subsidy Cash Depletion) , so plan sponsors should be considering now whether they will apply. 

This week’s column focuses on some commonly asked questions about the provision.

What is the retiree reinsurance program?

The retiree reinsurance program is a temporary program that will reimburse eligible employers that sponsor retiree coverage 80 percent of claims between $15,000 and $90,000.  It will reinsure only the claims for retirees between the ages of 55 and 64 years old (or their dependents) who are not Medicare-eligible.  Reimbursement only will be permitted to be used to reduce costs, premiums, or cost-sharing of plan participants or the plan sponsor (such as to offset premium increases).

How do I know if I am an “eligible employer”?

Plan sponsors of an employment-based plan (including a multiemployer plan) are eligible if they offer health plans to retirees between the ages of 55 and 64.  The health plan must implement programs and procedures to generate cost-savings with respect to participants with chronic and high-cost conditions and must provide documentation of those costs.  To participate in the program, plan sponsors must submit an application to the Department of Health and Human Services (“HHS”) to become certified.  Once approved, sponsors may request reimbursement for claims incurred on or after June 1, 2010.

How do plan sponsors apply for the program?

The official application will be posted to the Office of Consumer Information and Insurance Oversight’s website:  A draft application is on the site now.  Later this month, we expect HHS to post the final application and provide information about where to send completed applications and when sponsors can begin submitting applications.

What can plan sponsors do to increase the chance of receiving reimbursement?

HHS has said that applications will be approved in the order in which they are received, and incomplete or inaccurate applications will be rejected (and possibly sent to the “back of the line”).  So, to increase the likelihood of receiving reimbursements, applicants should file correctly and as soon as possible after HHS announces the application date.  If an application is rejected, it will be necessary to reapply, and there may not be any funds left with the application is re-submitted.

What information will be requested in the application?

According to regulations, the application will include a request for a projection concerning the amount of claims that would be reimbursed under the program for the first two plan years.  In addition, the application must state how the reimbursements will be used to: (1) reduce premium contributions, co-payments, deductibles, co-insurance or other out-of-pocket costs for plan participants; (2) reduce health benefit costs or premium costs for the sponsor; or (3) reduce a combination of the plan participant and sponsor costs.  The application must indicate how the sponsor will maintain its current level of contribution to the applicable plan.  The application also must indicate the procedures or programs that are in place that have generated or have potential to generate cost savings with respect to plan participants with chronic and high cost conditions.  Details of other information that must be included with the application can be found on the application website.

What is the time period that the program will run?

The program is scheduled to begin later this month and run until 2014.  Once the application is posted, HHS will begin certifying employment-based plans and reviewing claims.  However, while the program can run until 2014, it will be terminate when HHS has spent the $5 billion allocated to the program in Federal funding.


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Christy Tinnes is a Principal in the Health & Welfare Group of Groom Law Group in Washington, D.C.  She is involved in all aspects of health and welfare plans, including ERISA, HIPAA portability, HIPAA privacy, COBRA, and Medicare.  She represents employers designing health plans as well as insurers designing new products.  Most recently, she has been extensively involved in the insurance market reform and employer mandate provisions of the health-care reform legislation.

Brigen Winters is a Principal at Groom Law Group, Chartered, where he co-chairs the firm’s Policy and Legislation group. He counsels plan sponsors, insurers, and other financial institutions regarding health and welfare, executive compensation, and tax-qualified arrangements, and advises clients on legislative and regulatory matters, with a particular focus on the recently enacted health-reform legislation.