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April 28, 2010 By Jim van Iwaarden 6 Comments

The retiree health reinsurance gold rush

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.

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Filed Under: Early Retiree Reimbursement Program (ERRP), FAS 106, GASB 45, Other post-employment benefits (OPEB), Public plans Tagged With: Early Retiree Reimbursement Program, early retiree reinsurance program, ERRP, GASB 45, health care reform, OPEB, retiree health, retiree medical

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Comments

  1. Mary Meeker says

    May 11, 2010 at 9:09 am

    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.

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    • Jim van Iwaarden says

      May 11, 2010 at 11:16 am

      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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Trackbacks

  1. Update: the retiree health reinsurance gold rush « The VIA retirement planning blog says:
    May 13, 2010 at 4:03 pm

    […] our first post on this, we noted that a lot was still unknown about this.  There still is, but it’s becoming […]

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  2. Preparing to Apply for the ERRP Subsidy « The VIA retirement plan blog says:
    June 9, 2010 at 8:05 am

    […] We’ve had a couple of initial posts on the new Early Retiree Reinsurance Program (ERRP): the first one gave a quick overview of the amount of funds available, while the second post described options for […]

    Log in to Reply
  3. ERRP Reimbursement and Website Update « The VIA retirement plan blog says:
    September 17, 2010 at 7:54 am

    […] been busy gearing up for the implementation of the ERRP. As you may recall from our earlier posts (1, 2, 3), this is a program that’s part of the larger healthcare reform bill and is intended to […]

    Log in to Reply
  4. ERRP funds are going fast, but employers still have time to act « The VIA retirement plan blog says:
    January 19, 2011 at 2:57 pm

    […] 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 […]

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