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Early Retiree Reinsurance Program funds more than two-thirds paid out


WASHINGTON—More than two-thirds of a $5 billion temporary fund created under the health care reform law that partially reimburses early retiree health care plan sponsors for a portion of claims they pay has been distributed, according to the Centers for Medicare and Medicaid Services.

The CMS, a division of the federal Department of Health and Human Services, has dispensed approximately $3.62 billion in reimbursements under the Early Retiree Reinsurance Program, according to a Nov. 4 agency report. The November total indicates a faster rate of payout for the program; the CMS had only doled out $2.95 billion in reimbursements as of Sept. 22, and $2.73 billion as of Aug. 26.

Because the program drew such a large number of applicants, the CMS announced in April that it would not accept new applications after May 6, 2011.

Created as a provision of the Patient Protection and Affordable Care Act, the ERRP reimburses employers for a portion of medical claims filed after June 1, 2010, by retirees and their covered dependents, as long as the retiree is at least 55 years old and not eligible for Medicare.

The program pays 80% of medical costs, up to $90,000 per year, once a participant has reached $15,000 in claims.

A little more than 10% of the total $3.62 billion in payouts—about $379.7 million, up from $270.7 million in September—has gone to the United Auto Workers Retiree Medical Benefits Trust, a voluntary employees' beneficiary association created under the auspices of the UAW's 2007 collective bargaining agreement with General Motors Corp., Ford Motor Co. and Chrysler L.L.C.

That agreement stipulated that the auto giants contribute more than $50 billion to the trust. In return, the union released the companies from having to provide health care benefits to UAW-represented retirees and their dependents.

Other notable recipients as of Nov. 4, and increases, if any, from Aug. 26, of ERRP funds, include:

• AT&T Inc., $157.3 million, up from $141.5 million;

• California Public Employees' Retirement System, $131.4 million, up from $98.7 million;

• Verizon Communications Inc., $109.6 million, unchanged;

• State of New York, $88 million, unchanged.

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