Wednesday, May 5, 2010

HHS releases interim final rule on early retiree reinsurance program

The Secretary of Health and Human Services (HHS) released an interim final rule Monday that implements the Early Retiree Reinsurance Program established by the Patient Protection and Affordable Care Act (PPACA). The interim final rule will become effective on June 1, 2010, following a 30-day public comment period.

The interim final rule establishes specific eligibility rules and guidelines for applying for and using the available claim reimbursements provided by this program. Click to access the Early Retiree Reinsurance Program Interim Final Rule.

As required by PPACA, the program will:
• provide reimbursements to participating employer-based plans, including multiemployer, fully-insured and self-funded plans
• reimburse the employer-based plan 80% for certain health claims between $15,000 and $90,000 for covered retirees age 55 to 64 and their spouses, surviving spouses and dependents
• expire January 1, 2014 or when the $5 billion allocation to the program has been exhausted, if earlier

The new HHS ruling provides guidance, including the following:
• the reimbursement process will be similar to the process used for the Medicare Part D Retiree Drug Subsidy (RDS)
• eligible employers must have programs and procedures in place to help control costs for individuals with "chronic and high-cost conditions" such as diabetes or cancer
• premium cost is not included in the calculation of claims eligible for reimbursement
• plan sponsors must have written agreements with the insurance carrier or employer-based plan to ensure that necessary information will be provided to HHS upon request
• plan sponsors must have policies and procedures in place to reduce fraud, waste and abuse
• employers applying for reimbursement must project reimbursements for the next two years and explain to HHS how reimbursements will be used
• employers must use reimbursements to lower plan costs

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