WASHINGTON—The Centers for Medicare & Medicaid Services says it has paid out nearly half of a $5 billion fund created by the health care reform law that partially reimburses employers and other organizations that have early retiree health care plans.

As of May 3—the latest date reimbursement information for the Early Retiree Reinsurance Program is available—just over $2.4 billion had been paid out, up from $1.8 billion as of March 17, according to CMS.

Because of the rapid disbursement of funds, CMS announced in April that it would not accept new applications for reimbursement after May 5.

How it works

Under the ERRP, the federal government reimburses plan sponsors for a portion 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 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.

UAW agreement

Of the $2.4 billion distributed, $220.7 million—up from $206.8 million as of March 17—was distributed to the United Auto Workers Retiree Medical Benefits Trust. The trust is a voluntary employees’ beneficiary association set up by the UAW under a 2007 collective bargaining agreement between General Motors Corp., Ford Motor Co. and Chrysler L.L.C. and the UAW.

Under that agreement, the automakers agreed to contribute more than $50 billion to the VEBA. In return, the automakers no longer have to provide health care benefits to UAW-represented retirees and their dependents. The UAW is responsible for managing the VEBA and paying retiree health care claims.

Big recipients

Other big recipients, as of May 3, and increases, if any, from March 17, of ERRP funds include:

• AT&T Inc., $141.5 million, up from $140 million;

• California Public Employees’ Retirement System, $98.7 million, up from $57.8 million;

• Verizon Communications Inc., $91.7 million, unchanged;

• Public Employees Retirement System of Ohio, $70.6 million, unchanged;

• Teacher Retirement System of Texas, $68.1 million, unchanged;

• Georgia Department of Community Health, $57.9 million, unchanged;

• State of New York, $47.9 million, unchanged;

• State of New Jersey Treasury Department, Pension Accounting Services Department, $38.6 million, unchanged;

• General Electric Co., $36.6 million, unchanged; and

• The Boeing Co., $34.1 million, up from $18.8 million.