$1 billion of the original $5 billion has now been paid out under the Early Retiree Reinsurance Program (ERRP), according to an article this month in Business Insurance.
We’ve been watching the ERRP since its inception (posts 1, 2, 3, 4), and didn’t think the $5 billion allocation would last long. A July 2010 EBRI article estimated that it would last two years – and it might go even faster than that. The EBRI article estimates the average reimbursement at about $2,000 per early retiree (Figure 4 on page 5: $2,544m / 1.3m = $1,957) – but there can be huge variations for your own retiree group.
Many of our clients have applied for the ERRP and have been accepted. For employers that haven’t yet, there’s still time. And the application process isn’t as onerous as it initially appeared.
Here’s what you need to do:
1. Check with your health insurer to see if you’re likely to have any individual early retiree claims above $15,000. For midsize and large public-sector employers in Minnesota, Iowa, Indiana and Florida it’s almost a given – because subsidized early retiree coverage (the GASB 45 implicit rate subsidy) is mandated in those states.
2. Fill out and submit the ERRP application. Your health insurer can help with the trickiest parts of the application, i.e. cost control provisions and estimated reimbursements.
3. Once your application is approved, follow the process on the ERRP website to obtain reimbursements. Your health insurer will have an important role in the reimbursement process, since you won’t usually know when you have an eligible claim.