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Health Care Reform Update: Early Retirees and MHPA

May 14, 2010

Health Care Reform Update


Here's the latest health care reform and federal legislative news that will be impacting your clients:

  • Early Retiree Reinsurance Program helps employers provide coverage to retirees
  • Mental Health Parity has immediate impact on employers 

We will be sharing the articles below in an e-mail to Large Group employers on Monday, May 17. As the Early Retiree Program is not applicable to their group segment, Small Group employers will only receive Mental Health Parity information.

The Early Retiree Reinsurance Program helps employers provide coverage to retirees

The recently passed Patient Protection and Affordable Care Act includes an early retiree reinsurance program available to groups that provide medical coverage to early retirees and their spouses, surviving spouses and dependents. This temporary program will provide $5 billion to help employers to continue to provide coverage to retirees ages 55 to 64.

The program provides for reimbursement of an early retiree's (and covered dependents') health care claims in an amount equal to 80% of the costs between $15,000 and $90,000. The employer is then expected to use the reimbursement to help lower health care costs (such as premium contributions, copays and deductibles) for participating enrollees.

This program is expected to be effective from June 1, 2010, to January 1, 2014. After January 1, 2014, retirees will have additional coverage options through the health insurance exchanges and federal subsidies for coverage.

Both self-insured and fully insured employer groups that offer early retiree coverage can apply, including plans sponsored by private entities, state and local governments, nonprofits, religious entities, unions, and other employers. To participate in the program, employers must first submit applications to the Department of Health and Human Services, which is expected to make the application available in the coming weeks. We'll share a link to the application when it becomes available.

We are preparing to support employers who wish to apply for the reimbursement funds with appropriate reports and other information. Account managers will receive additional details within the next week to assist clients who may qualify for this program.

We are also sharing information on the states' responses to establishing high risk pools. Of the 14 Blue-branded states affiliated with our parent company, all decided to establish their own pool, except Nevada, Indiana, Georgia and Virginia. And while Maine and New York have guaranteed issue individual markets, both expressed the desire to have a process in which they could draw from federal funds to improve affordability in their markets.

Mental Health Parity has an immediate impact

The Mental Health Parity and Addiction Equity Act (MHP) is creating a significant and immediate impact on employer groups with more than 50 total employees. With this legislation, group health plans that provide mental health and/or substance use disorder benefits cannot apply "financial requirements" or "treatment limits" that are more restrictive than the "predominant" financial requirement or treatment limit that applies to "substantially all" medical/surgical benefits. We are working to ensure the health plans we offer fully comply with the provisions contained in MHP.

This Mental Health Parity overview and FAQ document have more details about how this will affect health plans. 

Health Care Reform Update

Please see the Health Care Reform Newsletter for updates on what happened with health care reform this week.

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