Earlier this month, the Department of Health and Human Services announced new information regarding a program in the Affordable Care Act that will make it easier for large employers to provide health benefits to early retirees who aren’t eligible for Medicare. The $5 billion early retiree reinsurance program will provide resources to businesses that offer coverage to retirees age 55-64.
We knew business leaders and retirees were excited about this program and a new study confirms that companies are eager to sign up and continue to provide coverage their early retirees. A new study out today from Hewitt Associates finds that 76 percent of eligible companies plan to apply to participate in the early retiree reinsurance program. The study also estimates that the program will reduce the cost of retiree coverage from 25 to 35 percent – anywhere from $2,000 to $3,000 per retiree, per year
The study is good news for retirees and their former employers. In recent years, high health care costs have made it difficult, if not impossible for employers to offer coverage to early retirees. 66 percent of large firms offered health benefits to their retirees in 1988. By 2008, the percent of large firms offering health benefits dropped to only 31 percent. And retirees without employer-sponsored often found it difficult to afford coverage in the individual market.
The early retiree reinsurance program will help maintain current coverage until 2014, when millions of Americans will have affordable coverage options through the new health insurance exchange. Businesses will be able to apply to participate in the program in June. You can learn more about how the Affordable Care Act will benefit early retirees here.
Stephanie Cutter is Assistant to the President for Special Projects.