HHS pegs 2011 early retiree reimbursement costs at $3.6B

WASHINGTON—The Department of Health and Health Services said Monday that it expects to distribute about $3.6 billion in reimbursements during fiscal 2011 to employers and other sponsors of early retiree health care plans.

The remaining $1.4 billion of the $5 billion fund authorized under last year’s health care reform law would be distributed during fiscal 2012, HHS said as part of budget documents.

The federal fiscal year runs from Oct. 1 through Sept. 30.

As of Jan. 25, more than 5,000 plan sponsors had been approved to participate in the program and about $1 billion had been distributed, HHS said.

Under the Early Retiree Reinsurance Program, the government reimburses sponsors of early retiree health care plans for a portion of claims incurred starting June 1, 2010, by retirees who were 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 an enrollee’s claims up to $90,000.

In general, the reimbursement must be used to reduce employers’ and/or retirees’ health care costs.