Subsidies Have Little Impact on Retiree Medical Strategies

The majority of respondents to a recent HighRoads survey indicated the Early Retiree Reinsurance Program (ERRP) subsidy either buys time to re-evaluate retiree medical plan strategies or has little impact at all.

Sixty percent of respondents said the ERRP subsidy has little impact on their retiree medical strategy. Of the companies for which the ERRP subsidy plays into their retiree medical strategy, most indicate that the subsidy buys them time to make changes to the retiree medical strategy.  

The majority of respondents (60%) also said that the elimination of the deduction for retiree prescription drug expenses will not result in a change to their retiree prescription drug benefit.The survey found that 79% of respondents receive the ERRP subsidy.   

ERRP, authorized by the Affordable Care Act (ACA), allocated $5 billion dollars to provide reimbursement to participating employment-based plans for a portion of the costs of health benefits for early retirees and early retirees’ spouses, surviving spouses, and dependents.   

In April, the Centers for Medicare & Medicaid Services (CMS) announced that, due to the overwhelming response, the Early Retiree Reinsurance Program will no longer be accepting applications after May 5, 2011, as it will be out of money (see “Early Retiree Reinsurance Program to End“).

The survey report is here.