Not a Member?  Become One Today!

Early Retiree Subsidy Ends Early
Funds ran out at the end of 2011

By Stephen Miller, CEBS  4/4/2011

last updated 12/19/2013

The health care reform law’s Early Retiree Reinsurance Program (ERRP) stopped accepting applications after April 30, 2011, according to a Centers for Medicare & Medicaid Services (CMS) memo to congressional staff, dated March 31, 2011.

Updates:

The U.S. Department of Health and Human Services (HHS)  announced in December 2011 that claims incurred by ERRP participants after Dec. 31, 2011, would not be accepted for reimbursement. The program, intended to last until January 2014, exhausted its $5 billion funding and is ending.

Plan sponsors that participated in the ERRP program had until March 30, 2012, to submit, for each plan year for which ERRP funds were received, a full-replacement claim list and an associated reimbursement request. If these items are not submitted, CMS will initiate procedures to recoup the ERRP funds.  

In December 2013, HHS's Center for Medicare & Medicaid Services announced that:

 "As part of the [CMS] plan to end the Early Retiree Reinsurance Program (ERRP) in 2014, [CMS] will disable Plan Sponsor access to the ERRP Secure Website (SWS) on January 10, 2014. Accordingly, Authorized Representatives, Account Managers, and Designees supporting Plan Sponsors, should assume that they will be unable to access the SWS after January 10, 2014. We encourage Plan Sponsors to take a final opportunity to review information available in the SWS to determine what, if any, information or data they may wish to print and/or save before the SWS is taken offline."

On March 28, 2011, CMS had issued a notice announcing it was exercising its authority under section 1102(f) of the Patient Protection and Affordable Care Act to stop accepting applications for the ERRP, due to the availability of funds, as of 30 calendar days after the date of the notice's publication in the Federal Register.

Employers, unions and state and local governments that provide an employment-based group health plan to early retirees, their spouses or dependents were eligible to participate in the ERRP. The program was funded with $5 billion in the health care overhaul and was designed to stay open until 2014, when state-run insurance exchanges are set to launch. But with the $5 billion expected to run out by the end of September 2012, the administration is shutting down enrollment early. [Update: As noted above, funds actually ran out at the end of 2011.]

Administration officials said that employers already enrolled in the program will continue to receive their approved funds, which must be used by December 2013. The program will not technically close until then, officials told the Capitol Hill newspaper Politico. 

GOP Critical of Program

According to a March 23, 2011, memo by Republican staff on the House Energy and Commerce Committee, 56 percent of ERRP funds in 2010 went to government organizations, with over one-third of the funds going to just five government entities. 

Moreover, "funds the ERRP will not spend on government entities will go to companies that do not appear to need the financial assistance of the federal government," the GOP memo charged. "Among the entities receiving funding are a number of large corporations that do not need the assistance of the federal government, and other entities that would not receive public support for assistance on an individual basis."

According to a CMS report, "as of March 17, 2011, approximately 5,850 applications, submitted by nearly 5,400 plan sponsors, have been approved for the program. These applications represent a variety of for-profit companies, schools and other educational institutions, unions, state and local governments, religious organizations, and other non-profits." 

Stephen Miller, CEBS, is an online editor/manager for SHRM. 

Related Articles—SHRM:

HHS Releases Guidance on Early Retirement Reinsurance Program Claims, SHRM Online Legal Issues, October 2010

2,000 Groups Approved for Early-Retiree Health Care Funds, SHRM Online Benefits Discipline, September 2010

Early Retiree Reinsurance Program: Frequently Asked Questions, SHRM Online Benefits Discipline, May 2010

Related Articles—External:

Health Reform Initiative Closing Early, Politico, March 2011 

Quick Links:

SHRM Online Benefits Discipline

SHRM Online Health Care Reform Resource Page

Sign up for SHRM’s free Compensation & Benefits e-newsletter

Copyright Image Obtain reuse/copying permission