How Health Reform Will Affect Early Retirees

The new law will provide $5 billion to employer health plans that cover early retirees, in order to make it easier for employers to offer coverage to these early retirees.  Employers will receive up to 80 percent reimbursement for providing those 55 and older, their spouses, surviving spouses and dependents health reinsurance.

This provision seeks to give large firms the incentive to provide retirees health insurance, which has dropped to 31 percent in 2008, from 66 percent in 1988.  This program will begin June 1, 2010, in advance of the original June 21st start date.

Employers will apply for this program through the Department of Health and Human Services (HHS).  To be eligible, employer plans must be approved by HHS, they must document claims and have the potential to generate cost savings for participants.  Employers will be able to use this program to either reduce their own health care costs, reduce employee premiums, or a combination of both.

This program will end on January 1, 2014, when early retirees, along with all others in the individual and group market will be able to choose their coverage in the health insurance exchanges.