Short Takes On News & Events

Fund To Help Cover Early Retirees Nearly Out of Money

By Christian Torres

December 9th, 2011, 1:23 PM

A $5 billion fund that helped cover health insurance for more than five million early retirees will stop taking claims for expenses incurred after Dec. 31 because it is running out of money, according to a notice Friday in the Federal Register.

Photo by EU Social via Flickr

The funds were used to reimburse employers who subsidize health insurance for early retirees, ages 55 to 64, not yet eligible for Medicare. The Centers for Medicare and Medicaid Services posted an update on the Early Retiree Reinsurance Program, part of the 2010 health law, noting that $4.5 billion had been spent as of Dec. 9. The early exhaustion of funds due to heavy enrollment had been anticipated.

Employers could file claims for 80 percent reimbursement of an annual employee coverage cost between $15,000 and $90,000. With funds dwindling, however, claims for costs incurred after Dec. 31 will no longer be accepted, officials said. The  program stopped accepting applications for participation on May 6.

The temporary program was intended to last through 2013, when other provisions of the 2010 health law that make it easier for people to find affordable coverage take effect, but employers took advantage of the fund much faster than expected. In late September, the Government Accountability Office reported that between the program’s start on June 1, 2010 and June 30 of this year, $2.7 billion had been spent. By Nov. 18, it was up to $4.1 billion.

5 Responses to “Fund To Help Cover Early Retirees Nearly Out of Money”

  1. Patrick Miller says:

    This has got to be one of the largest Federal boondoggles ever. If these early retirees needed the health insurance they should have worked until age 65 when Medicare kicks in. Unless I am missing something here, $5B of taxpayer monies was used to help people who retired early to pay premiums when instead it could have been used for preventive care services, drugs for the impoverished, hospice, or just about anything else besides helping people who helped themselves early. If people think the real retirement age is 55 or 65, then they are completely delusional given the general lack of savings in the American retiree population, declining pension programs, and our longer-living population. Get a grip America. We need to RAISE the Medicare age to at least 70 or 72 and put a means test in place. Meanwhile, this $5B should be refunded to the government. This is complete insanity. And yes, I’m a Democrat.

  2. Josh Mast says:

    Patrick, some of these people (possibly most of these people) did not choose to retire early. They were forced into early retirement by their employers who were trying to find ways to cut costs without laying people off. Just a thought.

  3. KD says:

    We wonder why our country is in a mess. We passed a law that allocates billions of dollars that we don’t have to programs like this. I agree with Patrick Miller. Why should we be subsidizing people that choose to retire early even though they can’t afford to do so? Doesn’t anyone else see that we are heading in the same direction as Greece and all of these other countries that have this entitlement mentality? How is it that we feel we can tell Europe to get their economic houses in order, but yet, not be able to do the same thing and make the same concessions?

    Although the ACA could have been a great step in the right direction, it legislated programs and requirements that are not sustainable and put a huge burden on businesses and the middle class. We could have implemented a number of the provisions without all the add-ons. Instead, we get a monstrosity that is falling apart by the day because it was not well thought out but rather crammed through.

    Rome wasn’t built in a day, nor did it fall in a day. These things take time and EFFORT and incremental steps. If we do not stop to recognize the shortfalls and instead pretend that everything is great, it is destined to fail. This is the case with anything….

  4. KD says:

    Josh, If that is the case, maybe the government should be looking at why these companies had to lay these people off early? Based on my experience, government regulations have become incredibly excessive and to ensure profitability many employers are looking for ways to reduce expenses. This generally means that they end up laying off the higher wage earners who are usually older vs the 20-somethings that will accept (or used to be willing to accept) lower wages. Age discrimination? Maybe. But, I would say that it is more wage discrimination. The more you make, the more scrutiny you are under…sadly enough we get penalized for being successful. The way to correct these discrepancies is not to pay for the early retirees to get healthcare, but to ensure that companies do not have to lay off workers to maintain their bottom line. We are looking at this problem and solution in entirely the wrong way.

  5. Mark says:

    Please keep in mind. When employers filed claims for this program, they were the ones that would recieve the reimbursement from the program for claims incurred. When requesting the funds, they would need to state how they would utilize the funds to reduce future increases or maintain benefits for active employees. What concerns me about this program is, I do not know of any employers that began an early retirement program because of the ERRP, their retiree programs were already in place. Therefore, employers have been and are receiving monies refunded to them by the federal government that they intended on spending anyhow. I think focusing on the frustration one may feel for individuals retiring early is not helpful, and really misses the mark. This is about employers recieving monies for something they were already doing on a voluntary basis. Not sure what the benefit was/is for the taxpayers?