Can sponsors use reimbursement funds from the Early Retiree Reinsurance Program to pay for expenses that are created by participation in the program?
No. The regulations state that the reimbursement may only be used to reduce the sponsor’s health benefit premiums or health benefit costs (keeping in mind that the sponsor must show maintenance of effort), to reduce the health benefit premium contributions, copayments, deductibles, coinsurance, or other out-of-pocket costs for plan participants, or any combination of these costs. Administrative costs created in order to participate in the Early Retiree Reinsurance Program are not health benefit premiums nor are they health benefit costs, nor do they reduce costs for plan participants. The term “health benefits” is defined in Section 149.2.
