The Early Retiree Reimbursement Program (ERRP); a word of caution about sharing savings with retirees

Employers who provide retiree health insurance received a windfall under the Affordable Care Act via the ERRP program which reimburses them for a portion of the expenses incurred by early retirees (pre-65).  Employers can use these funds in a variety of ways as long as they benefit the plan.  The idea is to help keep this coverage in effect at least until 2014 when the exchanges go into effect under PPACA.  Some employers are using a portion of the refund to keep 2012 premiums lower for the enrolled retirees, but is this a good idea? Perhaps it is not the best way to share this temporary payment.

Read more in this article I prepared for Health Insurance Illuminated.  

Note: The referenced blog post was written before HHS announced that the Medicare Part B premium for 2012 would be $99.90. That represents an average annual increase of only 1.2% since the last premium change several years ago and is far below the past five-year rate of increase in Medicare costs as reported in the Medicare Trustees in their 2011 annual report. The increase is also much lower than projected annual cost increases for 2012 and beyond.

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