<nobr>Jun 4, 2010</nobr>

ERIC Urges Fair Process in Administering Early Retiree Reinsurance Program

ERIC News Release
For Immediate Release

Washington, D.C. -- The ERISA Industry Committee (ERIC), the Washington, D.C.-based trade association representing America's major employers, today submitted comments on interim final regulations implementing the Early Retiree Reinsurance Program (ERRP) under the Patient Protection and Affordable Care Act (PPACA). The Department of Health and Human Services (HHS) published the interim final regulations in the Federal Register on May 4, 2010.

ERRP is a temporary program set to commence on June 21, 2010, intended to encourage companies to provide health care for pre-Medicare eligible retirees aged 55 to 64 and their dependents by reimbursing employment-based plans for a portion of the cost of health benefits for these individuals prior to their eligibility for Medicare.

ERIC's letter expresses concern with the approach to reimbursement specified in the interim final regulation because such a method could result in much of the $5 billion available for the program being allocated to only a few large funds.

"Under this scenario, only those funds and their plan participants that are fortunate enough to be at the very front of the application queue might benefit in the ERRP largesse; this would leave other retiree plans to struggle alone to meet the rising costs of health care, unaided by the federal funds which had been appropriated for this purpose," said ERIC President Mark Ugoretz.

ERIC's letter contends that the process for determining who will ultimately be allowed to receive ERRP funds is not clear. "The principle of 'first-come, first served' places a premium on being 'first in line' to file an application, yet the process for determining the 'first in line' does not seem to be objectively measurable or transparent," Ugoretz explains.

ERIC urges an approach whereby all companies that file a complete application within a certain period of time -- e.g., two days, two weeks, or even two months -- be permitted to participate in the program and ultimately to be capable of being reimbursed for claims. "Within this pool of applicants, reimbursements could be apportioned on a pro rata basis, perhaps one where all retiree claims filed in each claims reimbursement period were comparably reimbursed until the $5 billion in funding were exhausted," the letter said.

ERIC also urges that receipt of ERRP claims reimbursements should not impose an unreasonable "maintenance of effort" requirement on employers. The letter warns that "ERIC members have expressed significant concerns both with respect to how the ERRP maintenance of effort provision will be applied as well as the period of time that employers could be subject to the requirement."

ERIC contends that the statutory prohibition on using ERRP funds to augment general revenue to the plan sponsor should not be narrowly interpreted to require a maintenance of effort requirement based on a zero reduction in the actual dollar amount of employer health care spending from one year to the next. "A maintenance of effort rule, and particularly one evaluated only in straight dollar terms, is needlessly restrictive," the letter said.

Among ERIC's other suggestions are that:

• Any maintenance of effort provision adopted in compliance with this regulation should have a finite ending date and should extend no longer than employers have unused ERRP funds


• Administrative costs should be eligible for reimbursement


• The requirement that a plan sponsor produce proof that a retiree has paid his or her portion of a claim should be dropped

A link to ERIC's comment letter appears below.

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For more information:
Ted Godbout
Director, Communications
The ERISA Industry Committee
1400 L Street, NW, Suite 350
Washington, DC 20005
Phone: (202) 789-1400
Fax: (202) 789-1120
tgodbout@eric.org
www.eric.org

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The ERISA Industry Committee (ERIC) is a non-profit association committed to representing the advancement of the employee retirement, health, and compensation plans of America's largest employers. ERIC's members provide benchmark retirement, health care coverage, compensation, and other economic security benefits directly to tens of millions of active and retired workers and their families. ERIC has a strong interest in proposals affecting its members' ability to deliver those benefits, their cost and their effectiveness, as well as the role of those benefits in the American economy.

ERIC Comment Letter

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