The federal government is retiring its reinsurance funding program for early retirees, effective May 5.
The $5 billion Early Retiree Reinsurance Program, part of the Patient Protection and Affordable Care Act, offers a subsidy to employers to help offset medical costs of retirees between ages 55 and 64, their spouses and dependents.
The program has paid out nearly $1.8 billion in reimbursements to more than 1,300 employers in all 50 states, according to a new report by the CMS.
It is scheduled to sunset no later than January 2014. Based on spending trends, the CMS said it would no longer accept new employer applicants after May 5. The program began disbursing payments to plan sponsors last October for claims incurred after June 1, 2010.
Among the largest beneficiaries so far have been AT&T, which has received $140 million to support its health benefits to early retirees, and the United Auto Workers Retiree Medical Benefits Trust, with $206.8 million.
The Boeing Company received $18.7 million, UPS got $12.3 million and BP North America received $5.3 million. Eleven Blues plans collectively received $3.5 million, according to the CMS report.
Some 97% of the funds issued in 2010 were used to help reduce the health insurance costs paid by early retirees, the CMS said. Employers had the option of using the funds to offset their own or their retirees' healthcare costs, or a combination.
Michigan saw the highest amount paid out to employers through the program so far among all states, with nearly $320 million in funding to support employers' early retiree healthcare costs, according to the report.
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