Preparing to Apply for the ERRP Subsidy

We’ve had a couple of initial posts on the new Early Retiree Reinsurance Program (ERRP): the first one gave a quick overview of the amount of funds available, while the second post described options for spending the reimbursement. In this post, I’d like to give a quick overview of some actions plan sponsors can take now in order to speed up their initial application to participate in the ERRP.

The ERRP was designed with $5 billion in funding that will be available from June 21, 2010 until January 1, 2014, unless the money runs out first (very likely). So, it’s essentially first-come, first-served for employers who want to claim their share of the funds. In order to participate, however, a plan sponsor must first submit an application for approval by the Secretary of the Department of Health and Human Services.

As the regulations published on May 5, 2010 note, it is of “paramount importance to applicants that they submit complete applications upon their first submission.” Rejected applications will go to the “end of the line” for resubmission, and the regs hint these applications might not get reviewed again until it is too late (i.e., the ERRP funds are all gone). Fortunately, once a sponsor has the application accepted, they do not have to reapply in future years.

The HHS hasn’t released the actual application forms yet, but there are a few important actions that plan sponsors can take now so that they are able to submit their applications as quickly as possible. Plan sponsors should:

  • Figure out who their authorized representative will be. This person will sign the application and certify that it is true and accurate.
  • Draft a summary of how you will use the reimbursement money to reduce plan participant or sponsor costs.
  • Draft a summary of how you will implement programs and procedures to generate savings for plan participants with chronic and high-cost conditions. (This is one of the requirements of the ERRP program, but you should check whether your current plan already satisfies this condition so that you don’t unnecessarily change your plan provisions.)
  • Estimate your projected reimbursement amounts for the first two years of the ERRP. These projected amounts will be required on the application.
  • Identify all benefit options in your plan that are available to early retirees. The HHS will use this information to track where funds are being spent.
  • Make sure you can attest that there are fraud, waste, and abuse policies and procedures in place.

These are just a few of the items that plan sponsors are required to include in their ERRP application, but they are ones that you can proactively address. By preparing ahead of time, you can get an edge on your competitors in applying to receive ERRP funds.

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