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WASHINGTON—The Department of Health and Human Services said it has paid out about $1 billion for a federal program that partially reimburses employers and other organizations for health care claims incurred by early retirees and their dependents.
Under the Early Retiree Reinsurance Program, established as part of the health care reform law, the government will reimburse employers and other sponsors of early retiree health care plans for a portion of claims incurred starting June 1, 2010, by retirees who are at least 55 but not eligible for Medicare, as well as their covered dependents, regardless of age.
After a participant incurs $15,000 in health care claims in a plan year, the government will reimburse plan sponsors for 80% of claims up to $90,000. In general, the reimbursement must be used to reduce employers' and/or retirees' health care costs.
Congress appropriated $5 billion for the program, which was seen as a way to encourage employers to continue their early retiree health care plans until at least 2014, when subsidized coverage for the uninsured will be available through newly established state insurance exchanges.
However, researchers at the Employee Benefit Research Institute in Washington have projected that the money will run out sometime this year.
According to a letter sent Wednesday by HHS Secretary Kathleen Sebelius, Department of Labor Secretary Hilda Solis and Treasury Secretary Timothy Geithner to Speaker of the House John Boehner, R-Ohio, more than 5,000 organizations, including private employers, public entities and union funds, have had their applications approved to participate in the program. HHS began making reimbursements late last year and as of Dec. 30 said it had paid out about $1 billion.