Early takers for early retirement

Some of Fairfield County”™s largest employers have quietly begun the process of securing federal assistance to continue providing health benefits to workers who take early retirement.

Under the Patient Protection and Affordable Care Act, the Early Retiree Reinsurance Program is providing $5 billion for employers to maintain coverage for early retirees between age 55 and when they become eligible for Medicare. The funds can either be used to defray health care costs for health plan participants, or to reduce the plan sponsor”™s costs.

Through early October, the U.S. Department of Health and Human Services had approved some 3,000 employers for the program, with an unspecified number of additional companies expected to be admitted this fall.

There is no limit on the number of employers that can be approved to participate in the program ”“ actual claims will be awarded on a first-come, first-served basis, however, until the funds are spent. HHS does have the authority to stop accepting applications if the agency determines the $5 billion cap will be reached.

In an analysis of the program published this past summer, the Washington, D.C.-based Employee Benefit Research Institute estimated that the $5 billion in available money under the program would run dry in two years, well before the 2014 sunset on the program.

The state of Connecticut is receiving as much as $30 million under the program to cover some 11,000 employees who have taken early retirement offers. Of some 70 public and private entities statewide, several of Fairfield County”™s largest employers have been pre-approved to submit claims, including General Electric Co., General Re Corp., and Pitney Bowes Inc. In addition to the state of Connecticut, several municipalities secured funding, including Bridgeport, Fairfield, Greenwich, New Canaan, Newtown, Norwalk, and Stamford.

Other Fairfield County corporate recipients included:
Ӣ Arch Chemicals Inc. of Norwalk;
Ӣ Nestle Waters North America Inc. of Stamford;
Ӣ Praxair Inc. of Danbury;
Ӣ Purdue Pharma L.P. of Stamford;
Ӣ Terex Corp. of Westport; and
Ӣ Xerox Corp. of Norwalk.

Applicants who are approved into the program receive reinsurance for the claims of high-cost retirees and their families (80 percent of the costs from $15,000 to $90,000). The program ends on January 2014 when state health insurance exchanges are up and running.

Between 1986 and 1996, the percentage fell slightly of U.S. citizens who still working at age 55. Since then, however, that figure has risen sharply ”“ from 38.3 percent of the age group in 1996, to 44.9 percent in 2006, to a projected 48.3 percent in 2016.

In a survey published this month by Towers Watson & Co., which has offices in New York City and Stamford, four in 10 respondents indicated they are planning to delay their retirement, with maintaining health insurance the most important factor in the decision.

“The economic crisis has had a deep effect on employees”™ attitudes toward retirement and especially on risk,” said David Speier, a senior retirement consultant at Towers Watson, in a prepared statement. “Despite the signs that some employees are saving more, spending less and reducing debt as the economy stabilizes, workers continue to have a fear that they won”™t be able to afford retirement ”“ and that will have significant implications on companies”™ ability to plan their future work force needs.”

For those taking early retirement, meanwhile, benefits have been shrinking. Just 29 percent of large employers provided workers with retiree health coverage in 2009, according to the Kaiser Family Foundation, down from two thirds that did so in 1988.