The Department of Health and Human Services (HHS) announced late last week that the $5 billion Early Retirement Reimbursement Program (ERRP) fund, established under last year’s health reform law to reimburse sponsors of retiree plans for a portion of claims incurred by pre-Medicare retirees, is nearly out of cash and won’t reimburse claims incurred after December 31, 2011.
The program’s funds were used to reimburse employers who subsidize health insurance to early retirees, ages 55 to 64, who are not yet eligible for Medicare. Employers could file claims for 80 percent reimbursement of an annual retiree coverage cost between $15,000 and $90,000. By law, recipients of ERRP payments are required to use the payments to reduce plan participants’ costs, to reduce plan sponsors’ costs of providing coverage, or both.
HHS specified that any claims submission to the ERRP that includes one or more claims with an incurred date of January 1, 2012 or later, will be rejected in its entirety. To avoid such a consequence, a plan 
sponsor participating in ERRP should limit any future reimbursement request to claims incurred prior to January 1, 2012.
HHS also released a list of ERRP reimbursement recipients and the amounts they received. Telecom companies appeared to be the biggest recipients of ERRP money, with Verizon Communications receiving $163 million and AT&T receiving $214 million. State and local governments also were paid a significant share of the money, from the Ohio Public Employees Retirement System ($180 million) to the City of Lincoln, Nebraska ($3 million). Union health and welfare funds ($387 million to the United Auto Workers Retiree Medical Benefits Trust) and other corporations ($14 million to United Airlines; $31 million to IBM) rounded out the list of over 2,000 recipients.