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Fund To Help Cover Early Retirees Nearly Out of Money

A $5 billion fund that helped cover health insurance for more than five million early retirees will stop taking claims for expenses incurred after Dec. 31 because it is running out of money, according to a notice Friday in the Federal Register.

Photo by EU Social via Flickr

The funds were used to reimburse employers who subsidize health insurance for early retirees, ages 55 to 64, not yet eligible for Medicare. The Centers for Medicare and Medicaid Services posted an update on the Early Retiree Reinsurance Program, part of the 2010 health law, noting that $4.5 billion had been spent as of Dec. 9. The early exhaustion of funds due to heavy enrollment had been anticipated.

Employers could file claims for 80 percent reimbursement of an annual employee coverage cost between $15,000 and $90,000. With funds dwindling, however, claims for costs incurred after Dec. 31 will no longer be accepted, officials said. The  program stopped accepting applications for participation on May 6.

The temporary program was intended to last through 2013, when other provisions of the 2010 health law that make it easier for people to find affordable coverage take effect, but employers took advantage of the fund much faster than expected. In late September, the Government Accountability Office reported that between the program’s start on June 1, 2010 and June 30 of this year, $2.7 billion had been spent. By Nov. 18, it was up to $4.1 billion.