Health Care Reform - Early Retiree Reimbursement Program Application Is Now Available
As we have reported in an earlier Advisory, the health care reform laws establish, by June 23, 2010, a $5 billion reinsurance program to encourage employers to continue to offer group health plan coverage for certain early retirees, their spouses, surviving spouses and dependents. The reinsurance program is effective June 1, 2010, and will end on December 31, 2013.
In order to participate in the reinsurance program, employers who offer retiree health programs must submit an application and agree to the program requirements. The Office of Management and Budget recently posted a draft of the Early Retiree Reinsurance Program Application and draft application instructions.
Applications for the program will be processed in the order they are received. If an application is rejected, it must be resubmitted and will be handled based on the resubmission date. The Secretary of Health & Human Services can stop taking applications at any time when it appears that funding will be exhausted. Therefore, it will be crucial for applicants to file a complete application as soon as possible in order to obtain reimbursements.
In addition to submitting the application, employers participating in the program will need to meet a number of requirements, including:
Employers also will be limited in they way the reimbursements can be used. Under recently issued regulations, a plan sponsor must use the reimbursement proceeds to: (1) reduce the plan sponsor's health benefit premiums or health benefit costs; and/or (2) reduce the health benefit premium payments, copayments, deductibles, coinsurance, or other out-of-pocket costs for participants. Proceeds cannot be used as general revenue for the employer. As a part of the application, the employer must summarize and certify its intended use of the proceeds.
Employers interested in taking advantage of the program should use the draft application as a template to use in gathering information. Once the final application is available, employers should be prepared to file a complete application as soon as possible to get into the queue.
Our Employee Benefits Team is available to answer any questions you may have regarding the reinsurance program or any other employee benefit matter.
If you have any questions about this Client Advisory, please contact any member of our Employee Benefits Team.
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©2010 Sherman & Howard June 16, 2010