Not so long ago, most American employers kept offering health insurance to their younger retirees until they were old enough for Medicare.
Today, fewer than a third offer this benefit, and their ranks would likely be dropping even faster without a provision of the year-old federal health care overhaul that — like the rest of the law — could become history.
More than 200 public and private employers in Florida, and 5,000 nationwide, have signed up for the Early Retiree Reinsurance Program, which reimburses them for some of the health costs of retirees ages 55 to 64 and their families with high medical bills.
Since its launch in June, it has paid out $1.8 billion to U.S. employers.
Though slated to provide up to $5 billion in benefits until 2014, the early retiree program could end sooner if it runs out of money or if the controversial health overhaul law is repealed.
Advocates for older Americans say that would be a mistake for many reasons. But the reinsurance program in particular serves people at an age when they're likely to need medical attention but are too young for Medicare, the federal insurance program for people 65 and older.
"We do worry," said Nora Super, director of federal government relations for AARP, which has 40 million members, half of them under 65. "People are receiving real benefits from the law."
• • •
The program was among the first provisions of the health law to take effect, though many consumers may not know about it since it reimburses employers, not individuals.
When an early retiree from a participating employer racks up between $15,000 and $90,000 in medical bills, the company can apply for program funds.
Reimbursements are available for most medical, surgical, hospital and prescription drug costs. But there are many exclusions, such as elective cosmetic surgery, hearing aids and drugs not covered by a standard Medicare Part D plan.
The program is a response to the fact that soaring health insurance costs have prompted many employers to cut early retirees from their programs. Of course, some companies aren't even covering current workers any longer, but the dropoff in coverage for early retirees has been even more pronounced.
Only about 28 percent of large firms cover retirees, compared with 66 percent 20 years ago, according to a Kaiser survey on employee health benefits.
That has forced some to put off retirement until 65. But that's not an option for many, particularly those in physically demanding jobs, or those whose employers have downsized. And these days, it's hard for older workers to find another job with full benefits.
Some early retirees simply go without insurance until they hit Medicare age, a move that studies have shown increases Medicare costs because their illnesses haven't been treated promptly.
Some buy insurance on the private market, at premiums that are typically several times higher than employer-based coverage. Now, also due to the health law, people with pre-existing conditions can obtain private insurance — but at more than $700 a month for a couple, it's still too expensive for many people.
The Early Retiree Reinsurance Program, "addresses a very important segment of our population," said Anton Gunn, a regional director with the U.S. Department of Health and Human Services. "Where are you going to find affordable insurance at age 60?"
• • •
The Hillsborough and Pinellas school districts, Pasco-Hernando Community College, and the cities of St. Petersburg, Clearwater and Largo use the program.
Bay area private employers include TECO Energy, Eckerd College and Stetson University, AAA and Tampa-based Anchor Glass Container Corp.
TECO Energy has several hundred early retirees who receive subsidized health benefits through the company, said Brad Register, director of compensation and benefits.
"I think it certainly gives them some way to retire prior to Medicare, so they do have some coverage," Register said.
The company plans to use its 2010 reimbursements, which have not yet been tallied, to help contain premium costs for the early retirees.
Eckerd College offers continued health coverage to early retirees who are at least 55 and have a minimum of five years of service. Chris Brennan, Eckerd's vice president for business and finance, said the college hasn't yet had an individual with claims high enough to qualify for reimbursement.
School districts tend to have many early retirees.
"We have a lot of people who started when they were 22," said Deborah Henry, general manager of employee benefits and insurance for the Hillsborough County School District. "They work 30 years by age 52 and qualify for full retirement."
Ted Pafundi, director of risk management and insurance for the Pinellas County School District, said the district provides health benefits for 722 early retirees and their families, so the federal program is "very valuable."
You might even say that the reinsurance program is opening jobs for younger teachers.
If the districts didn't offer health benefits for early retirees, "you would have a good number of people who would still work," Henry said. "They would not be able to live without health insurance."
• • •
Though many have criticized the health law, few have singled out the early retiree reinsurance program.
But U.S. Rep. Bill Posey, R-Rockledge, has said the reimbursements amount to taxpayer subsidies to private companies.
He also is among those who say there's not enough money for the program. One estimate (PDF), by the nonprofit Employee Benefit Research Institute, says it could run through its $5 billion allocation by 2012.
Then there's the overall opposition to the health law, which has spurred efforts in Congress to have it repealed and in Florida courts to have it ruled unconstitutional.
Some polls show fewer Americans than ever want the law to survive. Advocates such as AARP's Super say they can only hope public opinion will change, and soon.
"We just want to help people understand what is really in the law, and understand what is at stake," Super said. "Sometimes, the rhetoric outweighs the evidence."
Richard Martin can be reached at firstname.lastname@example.org or (727) 893-8330