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GAO-11-875R 1 (2011-09-30)

handle is hein.gao/gaobacfiw0001 and id is 1 raw text is: GAO Acona ity * Integrity * Reliability United States Government Accountability Office Washington, DC 20548 September 30, 2011 The Honorable Michael B. Enzi Ranking Member Committee on Health, Education, Labor, and Pensions United States Senate Subject: Private Health Insurance: Implementation of the Early Retiree Reinsurance Program Dear Senator Enzi: During the last decade the number of large employers offering health benefits to retirees- including early retirees not eligible for Medicare-has declined. Among all large firms that offered health benefits to active employees from 2001 to 2010, the percentage that offered health benefits to retirees decreased from 39 percent in 2001 to 28 percent in 2010.1 According to the Agency for Healthcare Research and Quality, individuals age 55 to 64 who lack health insurance are vulnerable to high health care costs associated with serious and chronic illnesses.2 The Early Retiree Reinsurance Program (ERRP) was established pursuant to the Patient Protection and Affordable Care Act (PPACA) to provide reimbursement to participating employment-based health plans.3 The reimbursements provided by the program are intended to cover a portion of the cost of providing health benefits to early retirees- individuals age 55 and older who are not eligible for Medicare.4 Sponsors of participating health plans can include commercial organizations, government entities, nonprofit organizations, religious organizations, and unions. Under the program, these plan sponsors 1The Kaiser Family Foundation and Health Research & Educational Trust, Employer Health Benefits 2010 Annual Survey (Menlo Park, Calif. and Chicago, II1.: September 2010). Large firms were defined as firms with 200 or more employees. 2Agency for Healthcare Research and Quality, Near-Elderly Adults, Ages 55-64: Health Insurance Coverage, Cost, and Access (Rockville, Md.: May 2009). 3pub. L. No. 111-148, § 1102,124 Stat. 119, 143 (2010). Typically such a health plan is not a discrete entity to which payments can be directly made. Therefore, in implementing the program, the Department of Health and Human Services has interpreted this provision to require reimbursement to a sponsor, which it has defined to mean: a plan sponsor as defined in § 3(16)(B) of the Employee Retirement Income Security Act of 1974, except that in the case of a plan maintained jointly by one employer and an employee organization and for which the employer is the primary source of financing, the term means the employer. Early Retiree Reinsurance Program, 75 Fed. Reg. 24450, 24451, 24467 (May 5, 2010) (definition of sponsor to be codified at 45 C.F.R. § 149.2). 4For purposes of ERRP, health benefits provided to spouses, surviving spouses, and dependents of early retirees are also eligible for reimbursement, even if these individuals are under the age of 55 and/or are eligible for Medicare. Throughout this report, we use the term early retirees to refer to early retirees and their spouses, surviving spouses, and dependents. In addition to early retirees, eligible plans can also cover active employees and their spouses and dependents as well as retirees who are eligible for Medicare. GAO-11-875R Early Retiree Reinsurance Program Page1I

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