Insurelane Insurance Blog

The early retiree health insurance fund that was set up by President Obama is almost out of money already, even though it was designed to last up until at least 2014. The government set up a fund of $5 billion, known as the Early Retiree Reinsurance Program, which helped to pay for health insurance costs for over five million Americans who retired early.

According to an article by reason.com, there is a notice in the Federal Register that says the fund won’t be taking any more expense claims after Dec. 31, 2011, simply because there isn’t enough money left in it. The money was used to reimburse employers who had subsidized health coverage for people who retired between the ages of 55 to 64 and weren’t yet eligible for Medicare.

The program is a part of the 2010 health legislation and $4.5 billion of the $5 billion had already been paid out by Dec. 9. The money has gone so quickly due to heavy enrollment in the program. In fact, the program ceased back in April because of the heavy demand on it, which means it ended about 2.5 years earlier than it was scheduled to.

The program gave out generous subsidies to unions, corporations, schools, educational facilities, and religious organizations, etc. that funded health coverage for their early retirees. Employers were able to utilize the savings to cut down on their own health care costs or to supply relief to their employees and families or to combine both options. The number of employers that took advantage of the program came as a bit of a surprise to the government though.

The UAW (United Auto Workers) had received just over $200 million by April 2011 while telecom businesses Verizon received $91 and AT&T received $140 million. It was reported that over half of the money that was spent in the first year of the program went directly to government-operated retirement plans in several states including New Jersey, California, and Kentucky. However, the lack of funds now means new claims must be entered by the end of this month.