In another initiative announced this week to help early retirees pay their medical bills, the White House has announced a measure which will help pay the bills of early retirees who receive health insurance from their former employers.
Under the new program to help early retirees, the federal government will be able to reimburse employers for 80 percent of the cost of health insurance claims from $15,000 to $90,000 a year for each retired worker who is 55 or older and not eligible for Medicare.
The purpose of the initiative is to encourage employers to provide health insurance for retirees who leave their employment before they are eligible for Medicare. As older Americans, early retirees often have a very difficult time finding affordable health insurance, especially since many have pre-existing conditions which make them even less unattractive as health insurance applicants. Health insurance policies offered to older Americans almost always charge exorbitant premiums, if they are available at all.
At the same time, the number of employers who offer health insurance to early retirees has steadily declined since the 1980s. In 1988, two-thirds of large employers provided health insurance coverage to their retirees. Currently, less than a third of large employers provide retiree health insurance coverage.
Private employers, state and local governments, nonprofit and religious organization, and labor unions that sponsor health insurance benefits will be eligible to participate in this new program to help employers provide health insurance to early retirees. In addition, the program will be available to employers who pay premiums to insure early retirees, as well as to self-insured employers.
As a condition of participating in the program, employers must maintain their current contributions to the cost of retiree health benefits. Employers must use the federal money to reduce “health benefit costs” for themselves or their retirees, such as reducing health insurance premiums, deductibles or co-payments.
The new $5 billion program will run from June 1st until 2014, when health insurance must be offered to all Americans regardless of health status. In addition, in 2014, like all Americans without health insurance, early retirees will be able to access the state-run health insurance exchanges to buy their insurance.
However, Health and Human Services Secretary Sebelius has noted that the federal government could deny or stop accepting applications if it appeared that the $5 billion would run out before 2014.
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