Rising costs have made it difficult for employers to provide quality, affordable health coverage for workers and retirees.

Many Americans who retire without employer-sponsored insurance and before they are eligible for Medicare see their life savings disappear because of exorbitant premiums or inadequate coverage in the individual market. Americans shouldn’t be forced to choose between health insurance and retirement.

The Early Retiree Reinsurance Program (ERRP), created by the Affordable Care Act, provides much-needed financial relief for employers and other plan sponsors so retirees can continue to get quality, affordable health coverage.

Today, an annual report on ERRP released by HHS shows that the program is working to provide relief to America’s early retirees and their employers, like Betsy Rodriguez, vice president for Human Resources at the University of Missouri System.

“One of the greatest healthcare challenges for pre-65 retirees is obtaining health insurance,” said Betsy. “The options for coverage in the insurance market are very limited and those who retire early frequently do so because of health concerns. While our employees are fortunate to have this benefit, it is a large expense to our organization and the Early Retirement Reinsurance Program is assisting us in continuing coverage for this group of individuals.”

Since the ERRP program was established on June 1, 2010, HHS has accepted more than 5,000 applicants into the program including:

• Employers
• State and local governments
• Non-profits
• Religious organizations
• Unions that sponsor health plans for workers in their industry

Sponsors from every state in the country are enrolled in this program. As of December 31, 2010, ERRP had provided $535 million in reimbursements to sponsors, which is helping defray the cost of providing coverage to high-cost enrollees.

Program payments will benefit directly or indirectly more than 4.5 million retirees, current workers and other plan participants according to the largest sponsors. And 80% of plan sponsors – receiving 97% of program funds to date – will use some or all of their reimbursement dollars to lower premiums and out-of-pocket costs for retirees and their spouses and dependents enrolled in their coverage. That means more money in families’ pockets, improved financial stability, and less worry about getting the care they need.

The remaining 20% of sponsors will use reimbursement funds to offset increases in their own costs for providing coverage, which helps make American businesses more competitive and ensures that employers can continue to afford to provide this coverage for early retirees, active workers and their families.

ERRP is also helping highlight employer practices that can address and help manage high cost chronic conditions.  Employers in the program are investing in projects that can reduce costs by keeping Americans healthier – including telephone counseling from clinicians to help retirees manage their chronic disease and post-hospitalization discharge planning so that patients have a plan for follow up when they leave the hospital.

The bottom line is that the Early Retire Reinsurance Program is making it a little easier for retirees to get affordable, high-quality health benefits. After a lifetime of working hard, Americans should be able to retire with the peace of mind that they are covered by affordable, quality health insurance.

To read the report, visit www.HealthCare.gov/center/reports/retirement03022011a.pdf.  For more information about the Early Retire Reinsurance Program, visit www.HealthCare.gov/law/provisions/retirement.

By Richard Popper, Director of Insurance Programs in the Center for Consumer Information & Insurance Oversight