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Bringing Down Health Care Costs for America’s Businesses and Seniors

Secretary Sebelius explains how health reform creates an early retiree reinsurance program to help employers provide valuable coverage to retirees.

For too many older Americans, early retirement has meant losing access to affordable care and the peace of mind that comes with quality, affordable health insurance. When retirees try to purchase coverage on their own, they are left with plans that are prohibitively expensive with astronomical out of pocket costs. Some go without insurance, leaving them at a higher risk of contracting a chronic disease that can be expensive to treat. Others delay retirement, just to keep their health insurance.

Businesses suffer too. Employers across the country want to provide their retirees with health benefits, but skyrocketing health care costs have forced many to curtail or eliminate benefits for their retirees altogether.

One of our major goals in enacting health reform was to help lower costs for families and businesses and ensure everyone -- including retirees -- has access to care. Now, thanks to the new Affordable Care Act, many older Americans who have stayed awake nights worrying about losing benefits and many employers who are trying to help provide security for their work forces can breathe a sigh of relief. Help is on the way.

The new law provides help for many older Americans over the age of fifty-five through an early retiree reinsurance program available to businesses starting this June and some critical resources for employer-based plans.

Here is how it works. The early retiree reinsurance program created in the new law provides $5 billion for temporary financial help for employer plans to continue to provide valuable coverage to certain retirees. For more details, including what types of employer-sponsored plans are eligible and how payments will be made, check out this fact sheet.

Reinsurance programs have a proven track record of helping lower health care costs for businesses.  Reinsurance has been successfully used by a number of states to lower premiums for small businesses. It is an idea that has been advocated by large businesses, who wanted it to be part of the Affordable Care Act because they believe it will defray the high and often unpredictable cost of early retirees, helping them to maintain retiree benefits at affordable levels.

This program will provide many employers with the assistance they need and will help ensure they can continue to cover their retirees, and it's one of many benefits of the new law that I will discuss today at 1:00pm EDT during a special online web chat that you can watch live at  Health experts from HHS and AARP answer your questions about the benefits health reform brings for America’s seniors, so send your questions about the early retiree reinsurance program or any other questions you have to and we’ll do our best to answer them during the chat.

Kathleen Sebelius is the Secretary of the Department of Health and Human Services.