Early retiree health claims get a boost

November 8, 2010
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Nearly 200 businesses, governments, labor unions, universities and colleges and hospitals across Michigan have signed up for a piece of the $5 billion allocated for a health care reform program meant to defray the costs of insuring early retirees.

James Kohmescher, director of administrative services for Wyoming, said the city anticipates it could recover more than $190,000 for claims from people who have retired between age 55 and 65, when they become eligible for Medicare. The city provides health care to early retirees under union contract, he said.

“It goes into our insurance company and is applied against the claims that come in. That’s how you get your reimbursement,” Kohmescher said. “It’s a positive thing. It helps capture some expenses.”

At Kamminga & Roodvoets in Kentwood, where just three retirees fall under ERRP rules, it was fiduciary prudence that prompted Personnel Manager Robert deWard to make sure his company was qualified for the program. He said he sent in the application on the first day filing was available in July.

“I would think it’s due diligence to apply for it,” deWard said, adding that the company estimated ERRP claims to total $80,000 through 2013. “If I have the possibility of claiming dollars, I ought to be doing it. I have a fiduciary responsibility to recover as many dollars as I can.”

Under ERRP in the Patient Protection and Affordable Care Act of 2009, employers and unions may apply for reimbursement of medical claims for retirees and their dependents, who are at least age 55 but not yet old enough to qualify for Medicare, according to the federal Department of Health and Human Services. The program is a bridge to the anticipated establishment of health insurance exchanges in 2014, although the allocation could run out before then.

The reinsurance is aimed at high-cost retirees whose claims come to at least $15,000. It pays 80 percent of the retiree health claims from $15,000 to $90,000. The reimbursement can be used to reduce health care costs for employers, reduce premiums for workers and their families or both, the HHS said.

About a dozen Kent County-based organizations are among the approximately 2,000 employers nationwide who have been approved to participate in the program.

Others are qualified that are not based here but that cover early retirees in West Michigan, such as automakers and suppliers, the state government and the State of Michigan Public School Employees Retirement System. At the end of September 2009, the school retirement system had paid $794.8 million in health insurance benefits for 171,922 public school retirees and dependents. Figures for 2010 are not yet available, although this year’s public schools incentive program enticed another 17,063 into retirement, about four times the normal annual number.   

HHS said that new employers and plans are being added to the list daily. Local organizations that have qualified for ERRP include American Seating Co. Inc., Bissell Inc., Calvin College, Wyoming, Grand Rapids, Ottawa County, Haworth Inc., Kamminga & Roodvoets Inc., Louis Padnos Iron & Metal, Macatawa Bank and Steelcase Inc. Others include Chrysler, Ford Motor Co., General Motors and the 875,000-member UAW Retiree Medical Benefits Trust, Kellogg Co., Lear Corp., Western Michigan University and Whirlpool Corp.

For the full list, visit www.health.gov

According to a 2010 survey by the Kaiser Family Foundation and Health Research and Educational Trust, 28 percent of firms with 200 or more employees offer retiree health care benefits compared to just 3 percent for those with less than 200 workers. Large firms with union workers or with a greater proportion of older workers are more likely to offer retiree benefits, the survey showed.

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