KC Health Care Reform

An interim final regulation on early retiree reinsurance was issued last week. This program encourages employers to maintain insurance benefits for early retirees (ages 55-64) by reimbursing the employer for some of the increased costs of providing insurance for them. The program will reimburse claims for early retirees, their spouses, surviving spouses and dependents (if currently on the employer’s plan) at 80 percent of claims between $15,000 and $90,000 per plan year. The reimbursement must be used to offset plan costs, or to reduce premiums, copayments, deductibles or other out-of-pocket member expenses.

Five billion dollars has been allocated by the government for this program. We do not expect these funds to last through 2014, when the program will cease existence. It will be first come, first served, creating a sense of urgency for eligible employer groups. In 2014, early retirees will be able to obtain insurance through the State Exchanges that will be established.

The program will go into effect June 1, 2010, and applications will be available by the end of June. Companies can apply for the reimbursement, if they believe they are eligible and offer early retiree insurance currently. Upon request, Blue Cross and Blue Shield of Kansas City can provide certain information necessary as part of the application process, such as projections of claims and a summary of the chronic/high cost condition programs we offer. More details on this, including the cost of these reports, will be available by the time the program starts.

The program is somewhat complicated, and as we receive more information we will determine how best to put a process in place to assist our employer groups in taking advantage of the program. We expect to have further clarification on this within a couple weeks. We will keep you informed as more information and details become available.