Piece of Obama health plan to launch
The Obama administration on Tuesday said it would help employers insure early retirees, the latest in a series of announcements designed to cultivate support of health care reform overhaul among key interest groups.
The Early Retiree Reinsurance Program is designed to help employers cover early retirees who find themselves in a coverage gap, struggling to find affordable insurance coverage in the individual market and not yet eligible for Medicare.
The program, which will be implemented June 1 instead of the June 21 deadline outlined in the health care overhaul law, would provide employers with $5 billion in grants if they insure early retirees. The move won the praise of the Business Roundtable, a group that is skeptical of other parts of the overhaul because, they said, it would increase health costs for employers.
“While health care costs are the number one cost pressure facing our members, we are committed to providing coverage to our more than 35 million employees, retirees and their families,” said John J. Castellani, president of Business Roundtable. “The Early Retiree Reinsurance Program reduces costs and allows many of our member companies to continue providing this critical coverage.”
Employers, including private companies, local governments, nonprofits, unions or religious entities, can apply for reimbursements of up 80 percent of claims costs for health benefits between $15,000 and $90,000.
The Department of Health and Human Services has $5 billion to distribute to employers who apply, but it’s unclear whether the money will be enough to meet demand.
The percentage of large firms providing its retirees with coverage has fallen from 66 percent in 1988 to 31 percent in 2008, according to White House data.
“Rising costs have made it hard for employers to provide quality, affordable health insurance for workers and retirees,” Department of Health and Human Services Secretary Kathleen Sebelius said Tuesday. “As a result, many Americans who retire before they are eligible for Medicare are worried about losing health insurance coverage through their former employers, putting them at risk of losing their life savings due to medical costs. This new program will provide much-needed relief so that employers can provide more retirees with quality, affordable insurance, starting this year.”
The program will only be in place until 2014, when the overhaul plan’s insurance exchange will be in place, providing more insurance options to retirees. But it’s widely expected that once the exchanges are in place, fewer employers will provide insurance options to retirees.
A number of popular provisions in the overhaul plan are scheduled to be implemented within the next few months. While the reform plan as a whole did not poll well during the year-long debate on Capitol Hill, individual provisions did. Democrats are hoping that public perception of the overhaul turns in their favor once the public can take advantage of the plan, such as its small business grants, insurance industry regulations or the early retiree funding.
"This is yet another example of how health reform will help people this year," said House Ways and Means Chairman Sander Levin (D-Mich.). "My home state of Michigan, in particular, has been hit hard by the recession and by the economic pressures that threaten retiree coverage, especially for those ages 55 to 64. This fund will help ensure that the coverage workers have earned will remain available for their critical health needs."
The companies that qualify for assistance can use the money to reduce their own health costs or provide the funding directly to the employees, and their spouses and dependents. The plans would only qualify if they prove they can or could generate savings for enrollees with chronic medical problems and high-cost conditions.
Applications will be available by the end of June and benefits could apply retroactively for benefits since the start of their plan year.
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