May 2010 Health Care Reform Insights, "Retiree Reinsurance Program: Implementation Details"

Abstract

The Department of Health and Human Services (HHS) has published an interim final rule explaining how the temporary reinsurance program for employment-based plans that provide benefits to early retirees program, which was introduced by the Affordable Care Act (the abbreviated name for the Patient Protection and Affordable Care Act), will work. The interim final regulations are effective June 1, 2010, and HHS expects to have the program established by that date as well.

Under the Affordable Care Act, plans submit claims for reimbursement, and the Department of Health and Human Services will reimburse the plan for 80 percent of the claim costs that exceed $15,000 but are not greater than $90,000. Funds available for the program are capped at $5 billion, and the program ends on January 1, 2014 (sooner, if the funding runs out).

HHS has announced that the program will be administered in a manner similar to the Medicare Part D Retiree Drug Subsidy (RDS) Program - an electronic application and reimbursement program that has been in place since 2006, for plans that cover prescription drugs for Medicare eligible retirees. Plan sponsors familiar with the RDS application and eligibility/claims submission process should see similarities in the reinsurance program application.

This issue of Health Care Reform Insights summarizes the key provisions of the retiree reinsurance program outlined in the HHS regulations:

  • Group health plan eligibility,
  • Retiree eligibility,
  • Retiree expenses eligible for reinsurance program,
  • Application process,
  • Submitting claims for reimbursement,
  • Chronic and high-cost condition programs required,
  • Plan use of funds,
  • Annual audits required, and
  • Appeals.

 This issue of Health Care Reform Insights concludes with a list of action steps for sponsors of health plans that cover early retirees.

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