Friday, June 11, 2010

New York Times: EBRI's Data on Income of the Elderly

The New York Times today (June 11), in its "Economix" column, reproduces several key graphs from the June 2010 EBRI Notes, on "Income of the Elderly Population Age 65 and Over, 2008."  The article and figures are on the Time's website here.

The article notes that EBRI's data reveal "one particular challenge to cutting entitlements...older Americans gets the lion’s share of their income — nearly 40 percent — from Social Security, a share that an aging populace will likely be loath to shrink." The full EBRI Notes article is online here.

Monday, June 7, 2010

The Early Retiree Reinsurance Program: $5 Billion Will Last About Two Years

An advance release of EBRI's July 2010 Notes is now online at www.ebri.org, and finds that a $5 billion temporary reinsurance program designed to help employers maintain health benefits for early retirees likely will be exhausted within two years—well before the 2014 termination date for the program.


Key points of the analsysis:
PPACA’S EARLY RETIREE REINSURANCE PROGRAM: The Patient Protection and Affordable Care Act (PPACA) of 2010 created a temporary reinsurance program for sponsors of employment-based health plans that provide retiree health benefits to retirees who are over age 55 and not yet eligible for the Medicare program. The program provides an 80 percent subsidy for retiree claims of between $15,000 and $90,000. Congress appropriated $5 billion for the program, which is effective June 1, 2010, and the subsidy will be available through the earlier of Jan. 1, 2014, or the date when the funds are exhausted.


EMPLOYER INCENTIVE: One goal of the program is to provide an incentive for employers to maintain retiree health benefits and assist retirees with their costs for health coverage. Under the early retiree reinsurance program, plan sponsors must be able to show that the subsidies were not used to reduce their level of support for the plan. Subsidies can be used to reduce retiree costs, and sponsors must also show that the subsidies were used to generate savings or had the potential to generate savings.


EXHAUSTION LIKELY WITHIN TWO YEARS: An important question is whether the $5 billion will be exhausted before 2014. This article finds that if the subsidy were drawn down for all early retirees and their dependents, $2.5 billion of the $5 billion available would be exhausted in the first year of the program. The $5 billion would last no more than two years and would not be available in 2012 or 2013.