Healthcare Reform: Early Retiree Reinsurance Subsidy Regulations Published
Five billion dollars will soon be available for employers that sponsor a retiree health care plan
. The program, established by section 1102 of the Patient Protection and Affordable Care Act of 2010, provides reimbursements to participating employers for a portion of the high-cost claims associated with the plans provided to their early retirees and their spouses, surviving spouses and dependents. Regulations issued on May 4th provide guidance on how the program will be administered. For a copy of the regulations visit www.rdsservices.us/knowledgecenter.phpThis temporary program will make it easier for employers to provide coverage to early retirees. SO ACT QUICKLY!
Specifically, this Program will reimburse the employer plan up to 80% of claims costs for health benefits
between $15,000 and $90,000. Claims incurred between the start of the plan year (often January 1) and June 1st are credited towards toward the $15,000 threshold for reimbursement. However, only qualifying expenses incurred after June 1, 2010 are eligible for reimbursement under this program.
For example: If an individual incurs costs of $30,000 between the start of the plan year and June 1, and $40,000 after that date. The amount which may be reimbursed is $40,000 the costs above the $15,000 threshold that occur after June 1. If a plan incurs $90,000 or more in expenses before June 1, it is treated as having met the $15,000 threshold and is eligible for reimbursement for costs incurred after June 1.
These limits apply and claim costs are filed for each individual (i.e. spouse, surviving spouse and dependents) under the early retiree contract. Firms cannot add two or more individuals together, like retiree and spouse, to attain the threshold.
Health benefits that qualify for relief include medical, surgical, hospital, prescription drug, and other benefits that may be specified by the Secretary of Health and Human Services, as well as coverage for mental health services.
The regulations are very specific that employers can ONLY use the savings to either reduce their own health care costs, provide premium relief to their workers and families or a combination of both.
The following Use of Reimbursements is defined in the regulations as follows:
1.To reduce the plan sponsors premiums or health benefit costs, and
2.To reduce health benefit premium contributions, co-pays, deductibles, coinsurance, or other out of pocket costs for PLAN PARTICIPANTS
Department of Health and Human Services will begin the Early Retiree Program on June 1, 2010, in advance of the June 21 start date required by the Affordable Care Act, allowing more claims to qualify for reinsurance payments for plans this year. However, applications will NOT be available until some time near the end of June. Eligible employers can apply for the program through the Department of Health and Human Services.
To receive assistance, plans must have their applications approved, document claims, and have implemented programs and procedures that generate cost savings or have the potential to generate cost savings for participants with chronic and high-cost conditions.
Both self-funded and insured plans can apply, including plans sponsored by private entities, state and local governments, nonprofits, religious entities, unions, and other employers.
To learn more about how the Retiree Reinsurance Subsidy program will affect you, attend our free webinar:
Health Care Reform Planning Opportunities:
Details About The New Retiree Reinsurance Subsidy and Changes To The RDS Subsidy
Thursday, May 13, 2010
11:00 - 11:45 am EDT
Or RSVP to Jayne Brown at
jbrown@cornerstonebenefits.com or call 248-641-2892
RDS Services, LLC
RDS Services will be providing a service to qualify for the Reinsurance Subsidy. RDS Services has been working with CMS since the inception of the RDS program in 2005 assisting plan sponsors in the subsidy recovery process.
RDS Services are subsidy recovery specialists and currently provides full-service, turn-key applications for employers and union-based plans for submitting and monitoring their retiree drug subsidy applications.
Learn more at www.rdsservices.us and http://www.cornerstonebenefits.com/municipal.asp
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