There’s an intriguing provision in the new health care reform law for retiree medical plans:  80% reinsurance for each early retiree’s claims between $15,000 and $90,000.  The official summary is here.

There’s a fixed amount of money available for this, just $5 billion.  When it’s gone, it’s gone.  And remember that $5 billion doesn’t go as far as it used to, so you gotta get in line right away.  The application will be available in June, and it will be a lot like the one for Medicare Part D’s Retiree Drug Subsidy program.

Of course there’s a catch:  your retiree medical plan needs certain cost saving provisions to qualify.  It’s not clear yet what those should be. Actually, there’s a lot that’s not clear yet.  But it sure looks like a sweet deal, so it’s worth a look.

It will reduce OPEB costs for public and private employers, and for their plan members.  Exactly how much will depend on your own retiree health plan provisions.

6 Comments

  1. Has the GASB formally stated that reimbursements from the program will reduce OPEB liabilities for public employers? Can you tell me how this payment from the government to plans is different from the RDS payment in which GASB ruled does not reduce the OPEB liability? Thanks.

  2. Good question. Thank you, Mary! We haven’t yet heard from GASB on this, so it’s premature (at best) to say that this would reduce GASB 45 OPEB liabilities. In fact, their treatment of the RDS would indicate that any recognition of reinsurance payments will probably be allowed only as they occur. This would be much harder to measure in advance.

    I’ve edited the original post to reflect what we do, and don’t, know yet.

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