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October 5, 2010

HRB 21 - Early Retiree Reimbursement Program Updates

Released October 5, 2010I Download as a PDF

October 5, 2010 --  The Early Retiree Reinsurance Program (ERRP), established as part of the PPACA, is a program designed to encourage employers to establish or maintain retiree health coverage for their retirees, aged 55 to Medicare entitlement.  The ERRP will pay the equivalent of up to 80% of an early retiree’s claim between $15,000 and $90,000.  To be eligible for the program, an application must be filed with HHS; the application process opened on June 29, 2010. 

As a follow-up to our prior Health Reform Bulletins, HHS has recently issued important guidance, particularly relevant to plans that have been certified.  To date, according to HHS, 3,000 plans have been certified to receive ERRP reimbursements.

Preparing for ERRP Reimbursements

Plan sponsors with approved applications should begin taking steps now to prepare for the reimbursement process.  Following are action items for a plan with an approved application:

  1. Identify early retirees
  2. Identify eligible claims
  3. Format retiree data
  4. Complete early retiree list setup
  5. Submit the early retiree list to HHS’ ERRP Center
  6. Review response files from HHS’ ERRP Center
  7. Manage ERRP Early Retiree Information.

Two important preparation steps are accessing and registering with the ERRP secure website, and preparing an early retiree list.

  • Designated Authorized Representatives and Account Managers, who will be submitting data and requesting reimbursement on behalf of the plan, should register with the ERRP Center as soon as possible following receipt of application approval.
  • Plan sponsors should begin compiling its early retiree list to determine which individuals meet the ERRP eligibility criteria.  This list must be completed and submitted to the ERRP Center prior to submitting a reimbursement request.   The list can either be uploaded via the secured website, or by connecting with the Center’s mainframe.

Submitting Claims

HHS is currently developing the infrastructure needed to accept claims data and reimbursement requests.  It is expected that they will announce details relating to the manner and timing for submitting this information in the near future.

Types of Claims Eligible for ERRP Reimbursement

In general, plan sponsors may seek reimbursement for health benefit items and services for which Medicare would reimburse under Parts A, B, and D.  Examples of covered items and services under Medicare Parts A and B can be found in Section 1 (pages 15-39) of the Medicare and You 2010 Handbook.  To determine whether a prescription drug is covered under Medicare Part D, HHS recommends consulting with the relevant regulatory definition (42 CFR §423.100), plus review Chapter 6 of the Medicare Part D Manual.

Types of Claims Ineligible for ERRP Reimbursement

The ERRP website lists examples of items and services that are not covered by Medicare, and thus, not eligible for reimbursement.  These items include, by way of example only:

  • Custodial care, i.e., personal care  by non-medical personnel;
  • Routine foot care, such as orthopedic shoes;
  • Personal comfort items, such as a TV in a hospital room;
  • Routine vision services and appliances, such as glasses or contact lenses;
  • Hearing aids and auditory implants;
  • Cosmetic surgery, unless required as a result of accidental injury, or for the improvement of functionality of a body part;
  • Routine dental services;
  • Assisted suicide;
  • Certain infertility services;
  • Abortion services;
  • Drugs non covered by Part D, unless covered under Parts A or B; and
  • Items or services furnished outside the US.

Notice of ERRP Participation

All plans that have been certified for the program must provide a notice to all plan participants, both active and retirees, as well as covered family members, explaining that the plan has been approved to receive ERRP reimbursements, and that the resulting reimbursement monies may impact the participant’s coverage under the plan.  ERRP reimbursement monies can be used to reduce participants’ premium contributions, co-pays, deductibles, co-insurance, or other out-of pocket costs, or reduce future increases in cost of the plan. 

Content of Notice

HHS has developed a Model Notice to Plan Participants to be used for this purpose (see language for model notice on page 4). 

When to Provide the Notice

The notice must be provided immediately after the first reimbursement is received, but can be provided in advance. 

How to Provide Notice

The notice may be provided in one of several ways.  Hand delivery to the participant, as long as it is addressed to all covered family members, is sufficient.  For employees, the notice can be delivered electronically, such as through e-mail, as long as it is clear that the employee is responsible to providing the notice to covered family members.

Common Questions

The ERRP website (www.ERRP.gov) includes several commonly asked questions that may be helpful to plan sponsors.   These FAQs are divided into nine different topics: 

  1. Application
  2. Costs and reimbursement
  3. Early retirees
  4. Fraud, waste and abuse
  5. Price Concessions and Cost Adjustments
  6. Prohibition on Using Funds as General Revenue
  7. System Roles and Privileges
  8. Use of Reimbursement
  9. Miscellaneous

What Should An Employer or Plan Sponsor Do?

  • Plan sponsors should begin compiling its early retiree list to determine which individuals meet the ERRP eligibility criteria.
  • Authorized Representatives and/or Account Managers should make certain they register with ERRP Center as soon as they receive approval of the ERRP application.
  • Employers should work with its insurer or third party administrator to determine who will submit the claims, so that when the submission process opens in the next few weeks, the appropriate party can begin to submit claims for reimbursement.
  • Identify parties to whom the Notice of ERRP Participation must be sent.  Determine how the notice will be delivered to both active and retired employees, and their covered family members.

Background CBIZ Health Reform Bulletins relating to the ERRP:


About the Author:  Karen R. McLeese is Vice President of Employee Benefit Regulatory Affairs for CBIZ Benefits & Insurance Services, Inc., a division of CBIZ, Inc.  She serves as in-house counsel, with particular emphasis on monitoring and interpreting state and federal employee benefits law.  Ms. McLeese is based in the CBIZ Leawood, Kansas office.


The information contained herein is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. The information contained herein is provided as general guidance and may be affected by changes in law or regulation. This information is not intended to replace or substitute for accounting or other professional advice. You must consult your own attorney or tax advisor for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

As required by U.S. Treasury rules, we inform you that, unless expressly stated otherwise, any U.S. federal tax advice contained herein is not intended or written to be used, and cannot be used, by any person for the purpose of avoiding any penalties that may be imposed by the Internal Revenue Service.


[HHS Model Notice language]


You are a plan participant, or are being offered the opportunity to enroll as a plan participant, in an employment-based health plan that is certified for participation in the Early Retiree Reinsurance Program. The Early Retiree Reinsurance Program is a Federal program that was established under the Affordable Care Act. Under the Early Retiree Reinsurance Program, the Federal government reimburses a plan sponsor of an employment-based health plan for some of the costs of health care benefits paid on behalf of, or by, early retirees and certain family members of early retirees participating in the employment-based plan. By law, the program expires on January 1, 2014.

Under the Early Retiree Reinsurance Program, your plan sponsor may choose to use any reimbursements it receives from this program to reduce or offset increases in plan participants’ premium contributions, co-payments, deductibles, co-insurance, or other out-of-pocket costs. If the plan sponsor chooses to use the Early Retiree Reinsurance Program reimbursements in this way, you, as a plan participant, may experience changes that may be advantageous to you, in your health plan coverage terms and conditions, for so long as the reimbursements under this program are available and this plan sponsor chooses to use the reimbursements for this purpose. A plan sponsor may also use the Early Retiree Reinsurance Program reimbursements to reduce or offset increases in its own costs for maintaining your health benefits coverage, which may increase the likelihood that it will continue to offer health benefits coverage to its retirees and employees and their families.

If you have received this notice by email, you are responsible for providing a copy of this notice to your family members who are participants in this plan.

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