HHS Issues Interim Rule for Early Retiree Reinsurance Program

On May 4, 2010, the Department of Health and Human Services (HHS) issued an Interim Final Rule establishing the temporary early retiree reinsurance program under the Patient Protection and Affordable Care Act (PPACA) signed into law on March 23, 2010. Under the PPACA, $5 billion was appropriated to reimburse the sponsors of employment-based retiree medical plans for the cost of coverage for any retiree age 55 to 65, in the amount of 80% of the costs for any eligible individual between $15,000 and $90,000 of expenses per plan year. The reimbursements must be applied to reduce future increases in employer costs, and/or out-of-pocket costs for the covered early retirees and cannot be used to reimburse the employer's contributions towards the costs of the plan. The PPACA calls for the program to be in place by June 21, 2010, but the Interim Final Rule provides for the program to commence on June 1, 2010. The key features of the Rule are: