Healthcare Benefit Set to Take Effect

The sweeping healthcare bill signed into law by President Obama earlier this year will roll out slowly over the next several years, but one benefit for employers will arrive on June 1. The $5 billion Early Retiree Reinsurance Program federal subsidy will help employers cover healthcare for retired workers ages 55 to 65, who are too young to qualify for Medicare, reported AOL Small Business.

Large firms will likely be the first to apply for the subsidy and offer it to their employees, because it only applies to companies with existing retiree health insurance plans. Many small businesses cannot afford to provide this benefit, even though some will qualify for a piece of the $5 billion.

According to statistics released by the White House, the percentage of large firms that provide retiree coverage has been cut in half since 1988, dropping from 66 percent to 31 percent. The administration hopes the subsidy will prevent employers from canceling their retiree health plans to save money, and may encourage those that have already eliminated plans to restore them. Despite the potential benefits this healthcare perk will offer, some experts are concerned funds could disappear in as little as two years, although they are supposed to last through 2014.

To qualify for the subsidy, a business must have at least one retiree producing health claims of a minimum of $15,000 per year, but not beyond $90,000. The Early Retiree Reinsurance Program covers 80 percent of retiree claims. Businesses applying for the subsidy also must have existing programs that generate cost savings for treatment of chronic conditions like asthma or diabetes. For example, an eligible company could provide a disease management program that sends reminders to retirees to take their prescribed medication.