The City of San Angelo is self insured for employee and early retiree health insurance. It received approval from the federal government for the Early Retiree Reinsurance Program (ERRP). From June 1, 2010 to December 31, 2011 the City bears the following risk for early retirees:
$15,000 or less--100% of risk
$15,000 to $90,000--20% of the risk (80% ERRP)
$90,000 to $125,000--100% of risk
over $125,000--0% (stop loss coverage)
The City has three cases where claims exceed $125,000, over $375,000 total. Stop loss coverage kicked in. If those are early retirees and all claims came after June 1, 2010, Uncle Sam will reimburse the city $180,000.
Reimbursement could be thirty days away, the promised turnaround time for paying claims. Senator Jay Rockefeller (D-WV) stated:
"Since October, companies have been able to submit claims to obtain reimbursement for 80 percent of health care claims in the $15,000 to $90,000 range."
The City counts on stop-loss coverage. It can count on ERRP funding, but chose not to. Leaders did say they could conduct a mid-year review based on experience and ERRP chickens hatching. Rates could even be adjusted. However, retiree spouses and dependents may drop coverage January 1, giving the City fewer egg laying chickens.
Update: Thanks to General Dynamics Information Technology in Oakton, Virginia for their interest in this topic.