A federal health care law, that is part of the Affordable Care Act, is about to run out out funding. The law was designed to help employers be able to afford to offer health benefits to their retired workers. If the funding goes away, this could leave younger retirees completely without health insurance.
It is called the Early Retiree Reinsurance Program. This program was created as part of the Affordable Care Act. It provided some funding that would enable employers to afford to continue to offer their retired employees a health insurance plan.
Specifically, this was designed to help a group called “early retirees”. The phrase refers to people who are between the ages of 55 and 65, who have retired earlier than would typically be expected. Many companies offer incentives to encourage older workers to take an early retirement.
If their former employer’s didn’t offer them a health insurance plan, then this group would be entirely without health insurance. The “early retirees” are too young to be eligible for Medicare. A person must be at least age 65 before they can qualify for that program. People who are between the ages of 55 and 65 tend to have great difficulty finding an affordable health insurance plan from a private insurer. This is often due to having chronic health issues, such as high blood pressure.
The Early Retiree Insurance Program started out with a $5 billion “early retiree fund”. Around $4.5 billion of that money has already been paid out. The funds were intended to last long enough to bridge the gap between when the program was created and 2014, when the health insurance exchanges are expected to be up and running. Clearly, the remaining money in that fund isn’t going to last that long.
Employers who continued to offer their retired employees a health plan were able to get reimbursed for that cost through the “early retiree fund”. Once the money runs out, the employers will no longer be able to be reimbursed for what they spend on health plans for retired employees.
This could lead employers to decide to completely cut away funding for the workers who became early retirees. Right now, many employers are very interested in cutting down on the cost of the health insurance plans that they offer to workers. They also have been cutting back on the amount of workers who can become eligible to receive health benefits. Considering those trends, it is hard to believe that large corporations will make the decision to continue to offer retired workers a health insurance plan, once the possibility for reimbursement disappears.
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