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CMS to stop accepting claims for early retiree health care plan reimbursement

CMS to stop accepting claims for early retiree health care plan reimbursement

WASHINGTON—The Centers for Medicare and Medicaid Services will not accept claims incurred after Dec. 31 under a $5 billion program created by the health care reform law that partially reimburses employers and other organizations that sponsor early retiree health care plans.

CMS disclosed the filing cutoff Friday as the $5 billion Early Retiree Reinsurance Program fund is running out of money to pay claims. As of Dec. 2, more than $4.5 billion—up from $4.1 billion as of Nov. 3, has been distributed.

“CMS is exercising its authority…to deny certain reimbursement requests based on the available amount remaining of the $5 billion in appropriated program funding and the rate it is being disbursed,” the agency said.

The announcement had been expected, with benefits observers saying they doubted that funds would be available to pay claims incurred after the end of 2011.

“As we have been anticipating the past few months, the ERRP funds will largely or completely be gone before the end of 2011,” said Rich Stover, a principal with Buck Consultants L.L.C. in Secaucus, N.J.

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.

Of the total paid out so far, $387.2 million 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 Co., 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.

Other big recipients of ERRP funds and the payments they have received through Dec. 2, include:

• AT&T Inc., $213.8 million;

• Ohio Public Employees Retirement System, $180.1 million;

• Verizon Communications Inc., $163.0 million; and

• California Public Employees' Retirement System, $131.4 million.