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IWS Documented News Service
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Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
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Hewitt

Press Release 25 May 2010

Most U.S. Companies Planning to Apply for Temporary Federal Reinsurance Program, According to New Hewitt Survey

http://www.hewittassociates.com/Intl/NA/en-US/AboutHewitt/Newsroom/PressReleaseDetail.aspx?cid=8475

May 25, 2010

Companies Offering Pre-65 Retiree Medical Benefits Intend to Pursue Reimbursement but Are Unsure How They Will Use Proceeds

LINCOLNSHIRE, IL — As U.S. employers continue to digest the provisions within the health care reform law, a new survey by Hewitt Associates, a global human resources consulting and outsourcing company, found most companies that offer pre-65 retiree medical benefits intend to apply for the Early Retiree Reinsurance Program (ERRP) to offset a portion of health care claims costs for retirees ages 55 to 64 and their families.

Conducted in May 2010, Hewitt's survey of 245 large employers that offer medical benefits to more than 1.3 million retirees found that more than three-quarters (76 percent) of companies plan to pursue reimbursement under the ERRP, a provision in the newly enacted health care reform law that goes into effect June 1, 2010. Under the new program, companies can receive an 80 percent reimbursement on claims incurred by early retirees and dependents between $15,000 and $90,000 over the course of a year. Eligible claims include medical, prescription drug and behavioral health. The ERRP will last until January 1, 2014, or until the $5 billion set aside for the program is exhausted.

Hewitt estimates that the average federal reimbursement will represent between $2,000 and $3,000 per pre-65 retiree per year, or approximately 25 percent to 35 percent of total health care costs. As an example, for a company that covers 1,000 pre-65 retirees, participation in the ERRP could result in $2 million to $3 million in reinsurance proceeds per year.

AND MORE....

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This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.

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Stuart Basefsky                   
Director, IWS News Bureau                
Institute for Workplace Studies 
Cornell/ILR School                        
16 E. 34th Street, 4th Floor             
New York, NY 10016                        
                                   
Telephone: (607) 255-2703                
Fax: (607) 255-9641                       
E-mail: smb6@cornell.edu                  
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