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DEPARTMENT OF FINANCIAL MANAGEMENT <br /> RISK MANAGEMENT DIVISION <br /> MEMORANDUM NO. 2011-01 <br /> January 11, 2010 <br /> TO: Honorable Mayor Michael T. McElroy and City Council <br /> FROM: Ryan McCrady, Ci anager <br /> Ron Neufeld, Direc of Financial Management <br /> Scott Clark, Risk M nager <br /> SUBJECT: EARLY RETIREE REINSURANCE PROGRAM <br /> SUMMARY RECOMMENDATION: <br /> It is recommended by staff that the City Council approve the attached resolution <br /> awarding the contract for the administration of the Early Retiree Reinsurance Program to <br /> Blue Cross Blue Shield of Illinois for a period of one year from the date of approval. <br /> BACKGROUND: <br /> The Patient Protection and Affordable Care Act included a provision that provides <br /> funding to support the Early Retiree Reinsurance Program (ERR Program). Congress <br /> appropriated $5 billion for the program, which was seen as a way to encourage employers <br /> to continue their early retiree health care plans. The program has an expiration of <br /> January 1, 2014 but is expected to run out of the appropriated funds sometime in late <br /> 2011. The ERR Program applies to employer-sponsored fully insured and self-insured <br /> plans that offer benefits to retirees who are 55 or older but not eligible for Medicare, as <br /> well as their covered dependents. The ERR Program allows plans to be reimbursed for <br /> 80% of certain claim expenses between $15,000 and $90,000 per individual plan year. <br /> The reimbursement may be used to provide premium relief and other health care cost <br /> relief to retirees and workers and their families, to offset increases in the self-funded <br /> health plan or in any combination. <br /> After the program was announced the City completed an application and was approved <br /> for participation in the ERR Program. Included in the application was the response that <br /> the City would apply all of the reimbursements to the self-insured plan fund in an effort <br /> to offset any increases or minimize increases to the fund expenses. The reimbursement <br /> amounts are solely dependent on the actual claim expenses of the retirees age 55 or older <br /> but not eligible for Medicare and the anticipated reimbursement from the program range <br /> i from $130 000 to over $200 000. <br /> � , <br />