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Early Retiree Insurance Subsidies Reach 5,000 Employers

By CQ Staff

March 2, 2011 -- More than 5,000 employers have kept 61,000 retirees on their health insurance plans as a result of the subsidies they’ve gotten from the Early Retiree Reinsurance Program, created by the health law as a bridge to 2014 when the health exchanges will give them easier and more affordable access to insurance.

Health and Human Services (HHS) officials released a report Wednesday detailing the results of the program. As of the end of 2010, the federal government had distributed $535 million to companies, state and local governments, educational institutions, unions and nonprofit organizations.

“The Early Retiree Reinsurance Program is helping to control health care costs and protect coverage for early retirees and their families,” HHS Secretary Kathleen Sebelius said in releasing the report. “This program is providing critical financial relief to help states, private employers and other organizations preserve access to affordable health coverage for millions of Americans.”

HHS officials said beyond the 61,000 retirees who might not have been able to stay on their former employers’ plans without this program, there are indirect benefits to existing employees, dependents and spouses because of lowered health care costs. HHS estimated that the subsidies have helped to benefit more than 4.5 million Americans.

The report also points out that the percentage of large firms that provide retiree health coverage dropped from 66 percent in 1988 to 29 percent in 2009. Health insurance premiums for older Americans cost four times more than for young adults. The deductibles for these enrollees pay is, on average, almost four times that in a typical employer-sponsored insurance plan, HHS officials said.

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