The White House announced this week that it’s moving up the start date to June 1st for the new retiree reinsurance program in the health reform bill. The program is designed specifically for Americans in early retirement – those between the ages of 55 and 64 who are eligible to maintain health insurance through their former employer but are not quite old enough for Medicare, which kicks in at age 65.

Congress crafted the $5 billion reinsurance fund in the health reform bill to pay 80% of claims between $15,000 and $90,000 annually for individual beneficiaries. This fund is designed to help companies avoid raising rates and reducing benefits by paying for the bulk of expensive claims incurred by retirees. Employers can apply for the program through the Department of Health and Human Services and must use the funds to reduce health care costs for retirees including premiums, deductibles and co-pays.

This new programs is good news for businesses and retirees alike. Employers from major corporations to small town municipalities have made headlines over the years for cutting retiree benefits and raising premiums to unaffordable levels. A Kaiser Family Foundation report in 2004 found that year retiree health premiums shot up 25% on average, and employers reduced benefits and increased cost-sharing. Although there is some debate as to whether companies are cutting benefits in response to rising health care costs or to increase their bottom line, the new law aims to reduce the strain of providing health insurance to retirees.

This new fund will help benefit people like Ellen in Cornville, UT, who was forced into retirement early by her company and initially thought it was a blessing in disguise. Quickly her health insurance premiums went from $17 per month to over $500 per month and her husband was dropped from the coverage. Dave in Asheboro, NC, had the same experience when his former employer stopped subsidizing retiree health benefits and his monthly premium went up over $1,000 per month for him and his wife.

You can read the Administration’s fact sheet to learn more. If you’ve retired under 65 and seen your former employer raise premiums or cut benefits, let us know in the comment section below.

comments (4)

I began to receive Medicare benefits at 62. It is not necessary to wait until age 65.

I retired at age 65 & have applied for Medicare; however, I am concerned that it will not cover all my medical expenses, especially an expensive treatment that is scheduled to begin later this year. I am considering an AARP supplemental ins. plan in case Medicare is not sufficient; Or, paying for COBRA coverage from my former employer. Trying to determine which option is best coverage & best value is very confusing.

How do you qualify for Medicare at age 62 unless you are also collecting SSDI?

This is for Bryan: You DO understand that with COBRA YOU will be paying for the entire amount of your monthly premium, right? In many cases, the employer picks up 2/3 of the premium, so keep that in mind as you consider your choices. Medicare plus an AARP supplemental insurance policy may end up being a lot cheaper than COBRA.

Post a Comment (* indicates a required field)

*Name:

*Email Address:

URL:

*Comments: (you may use HTML tags for style)

*Security Code:

<<< You must enter this security code!

Remember Me? Yes No