WASHINGTON—A $5 billion federal program that partially reimburses health plan sponsors for claims by early retirees paid out more than $500 million in its first few months, with more than half going to governmental entities, according to a report released Wednesday.

The report by the Department of Health and Health Services on the Early Retiree Reinsurance Program said that as of year-end 2010, $535 million had been paid in reimbursement to 253 plan sponsors.

Of the $535 million, just more than $298 million, or nearly 56%, went to governmental entities. Nonprofit organizations, which in some cases include multiemployer union plans, received nearly $129 million; commercial plans, which include those sponsored by private-sector employers, received nearly $95 million; and union plans, just more than $13 million.

The early retiree program was established as part of the 2010 health care reform law. Under the program, the government reimburses plan sponsors for part of claims incurred starting June 1, 2010, by retirees who are at least age 55 but not eligible for Medicare, as well as covered dependents, regardless of their age.

After a participant incurs $15,000 in health care claims in a plan year, the government will reimburse 80% of claims up to $90,000.

It isn't surprising that a majority of reimbursements have gone to public entities, as the number of private-sector employers sponsoring early retiree health care plans has dwindled during the past two decades.

Public entities identified in the report as receiving reimbursement by year-end 2010 include the California Public Employees' Retirement Systems, which had received $57.8 million in reimbursement; the Georgia Department of Community Health's State Health Benefit Plan, which received $34.9 million; and the Commonwealth of Kentucky, which received $29.7 million.

More than 5,000 plan sponsors have been approved to participate in the program.

But the $5 billion Congress appropriated for the ERRP is likely to run out long before the program's Dec. 31, 2013, scheduled expiration. Last month, HHS projected that nearly $3.6 billion would be spent on the program in fiscal 2011, which ends Sept. 30, with the remaining $1.4 billion being distributed in fiscal 2012.

The report is available at www.healthcare.gov/center/reports/retirement03022011a.pdf.