Few Groups Applying for Subsidies To Help Cover Early Retiree Insurance
Few companies or unions are taking advantage of a provision in the federal health reform law that provides subsidies to help offset the cost for companies and unions to provide health coverage for early retirees, according to data from the Employee Benefits Research Institute, CQ HealthBeat reports.
Thus far, only 3,000 organizations have sought and been approved for the subsidies, although about 444,150 organizations offer health benefits to early retirees.
The provision affects companies that provide health coverage for retirees ages 55 and older who are not yet eligible for Medicare.
Under the provision, the government will pay 80% of the cost of medical claims between $15,000 and $90,000 for such retirees. The provision allots a total of $5 billion in subsidies until Jan. 1, 2014.
Potential Causes of Low Participation
Paul Fronstin of EBRI speculated that one of the main reasons for the small number of organizations applying for the subsidies is that the provision does not allow companies to reduce the amount they spend on early retiree care.
Although the companies can use the federal money to reduce retirees' premiums and deductibles, it does not reduce their overall insurance costs.
The Obama administration has not yet commented on whether it will increase promotional efforts for the provision.
Richard Sorian -- assistant HHS secretary for public affairs -- said, "It is important to recognize the application process remains open," adding, "As employers learn about it and hear about their competitors qualifying, we would expect more firms to apply" (Reichard, CQ HealthBeat, 10/14).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.