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Why Read About The Affordable Care Act? Maybe Because It Effects Most All Employers

The Affordable care act that was passed into law by president Obama has lead to many changes in health care. One of the most beneficial and maybe overlooked aspects of it to organizations is the part that established the
Early Retiree Reinsurance Program
. This article hopefully will break down and help in clearing up just what the program is and what its purpose.

What This Program is- This Program was created by The Affordable Care Act which was passed into law by President Obama. The program provides $5 billion in financial assistance to employers, unions and state/local governments to help them maintain coverage for early retirees age 55 and older who are not yet eligible for Medicare. Reimbursements that are acquired by the filing organization are meant to reduce their own health care costs and provide premium relief to their workers and families. For those who are familiar with the
Retiree Drug Subsidy Program
this new program wont be to difficult to understand due to the mimicking of many aspects of RDS. Like the RDS Program the Government agency in charge of heading up this program is the department of health and human services (HHS) and all final say in the process comes from them.

What dose this Program Cover- As posted on Health Reform.gov Health benefits claims that qualify for relief include medical, surgical, hospital, prescription drug, and other benefits that may be specified by the Secretary of Health and Human Services, such as coverage for mental health services. The amount of this reimbursement to the employer is up to 80 percent of medical claims costs for health benefits between $15,000 and $90,000. Claims incurred between the start of the plan year (often January 1) and June 1 are credited towards toward the $15,000 threshold for reimbursement.

EXP: If an Individual incurs a cost of $30,000 between the start of the plan year and June 1, and $40,000 after that date. The amount which may be reimbursed is $40,000- the costs above the $15,000 threshold that occur after June 1. If a plan incurs $90,000 or more in expenses before June 1, it is treated as having met the $15,000 threshold and is eligible for reimbursement for costs incurred after June 1.

Who is this Program for- According to Health Reform.gov the financial assistance is meant for employers, unions, non profit, religious, and state and local governments to help them maintain coverage for early retirees age 55 and older who are not yet eligible for Medicare. The Idea behind it is that the savings will be used to reduce health care costs and provide premium relief to the employers' workers and families. With the rising costs of health care this program is designed to encourage employers to keep benefits intact for those who retire early.

When will this program take place- As of January 1 2010 HHS Secretary has established the Temporary Retiree Reinsurance Program. This program then became effective as of June 23 2010 and as of June 29 2010 applications have been posted and have begun being accepted. A major question still with this program is when will the 5 billion dollars run out? And what will happen to the program once it dose? Most experts predict the program to last until 2012 (two years short of its projected date) but both questions have yet firm answers addressing them at this time. The best advice would be to file as quickly as possible as claims are being processed on a "first come first serve" basis. There are different opinions as to if the funding will run out but according to many experts who have crunched the numbers the money should go quick. Although $5 billion sounds like a lot, on a large nation wide scale many say it really isn't.

Where are these funds coming from- There have been funds appropriated in the health reform bill that gave a set amount of 5 Billion dollars in financial aid to employers. The money is intended to be a temporary form of relief to employers until 2014. Once 2014 happens the Bill will be full established and there will be many newly established acts for both employers and employees. Remember though that the funds are set at 5 billion dollars and there is no guarantee that it will be replenished once funds run out.

Why has this Program come to pass-There are many reasons why this program came to be but the most simple and important reasons are there first there is a growing population that as they age is at a greater health risk. The "Baby Boomer" generation is getting older and obviously the older you get the more health issues you have. Greater health issues have lead to greater out of pocket health costs as well as higher premiums for older Americans. According to the White house fact sheet less than half of the people ages 55 to 64 work full time and many retire before 65. Over the years this has lead to employers' significant decrease in coverage of these people and with Individual market insurance not being an option due to high cost many retirees are left with little options.

It is important for organizations to take advantage of every opportunity they have to operate as best they can. In harder economic times like these ERRP can help give companies an edge when funding retiree health care