WASHINGTON – U.S. Senator Ben Cardin (D-MD) has co-sponsored legislation to protect and stabilize health care coverage for retirees. The Retiree Health Coverage Protection Act would provide an additional $5 billion to the Early Retiree Reinsurance Program (ERRP) to help retirees afford health insurance and costly medical expenses.
“This bill provides additional needed support for a program that helps retirees keep their comprehensive employer-based health coverage. I’m pleased that many Maryland companies and their retirees have been able to benefit from this program, and this bill would allow even more to participate,” said Senator Cardin, a member of the Finance and Budget Committees.
Millions of retirees nationwide, age 55-64, rely on health coverage through their former employers until they become Medicare-eligible. However, retiree plans often have a disproportionate share of enrollees with high medical costs. Older and sicker enrollees with chronic conditions can drive health care premiums to unaffordable levels. This is one reason the percentage of large firms that provide workers with retiree coverage fell from 66 percent in 1988 to 29 percent in 2009.
The ERRP addresses this problem by providing financial assistance to employers offering early retiree health coverage. Participating employers can receive reimbursement of up to 80 percent of catastrophic medical claims between $15,000 and $90,000 for their early retiree enrollees. The reimbursement is used to reduce the employer’s health care costs and to lower premiums to retirees and their families.
ERRP has been so successful that the U.S. Centers for Medicare and Medicaid Services (CMS) has suspended applications for the program on May 6 because the overwhelming response is on pace to exhaust the $5 billion in available funding.
The Retiree Health Coverage Protection Act would provide an additional $5 billion in ERRP funding, which would allow the program to continue through January 1, 2014, when health insurance exchanges will be operational.