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Retire Early and Keep Your Health Benefits: The Affordable Care Act of 2010 Posted: May 1st, 2010

By Robert Foreman

Robert Foreman has taught English at the college level for five years, and worked previously as a corporate analyst and as a legal assistant. He is currently a PhD candidate in English, with a nonfiction writing emphasis.

Anyone between the ages of 55 and 64 who wants to retire faces a dilemma: Early retirement brings the benefits of increased time for leisure, but could also mean a loss of health insurance. Some retirees are not yet old enough to qualify for Medicare, which can create a new set of worries for those who come down with an illness and do not have medical benefits.

The Affordable Care Act of 2010 was passed in order to remedy this predicament. The law provides reinsurance for early retirees. This program supplements employer-sponsored health plans, so that health insurance coverage for an employee can continue into his or her retirement. This is designed to help provide insurance to those in need, and to reduce premiums for employers that want to care for their former workers.

What the Act Offers

If your employer chooses to apply for and participate in the Affordable Care Act, the employer health plan receives 80 percent of the cost, between $15,000 and $90,000, of caring for every early retiree. In short, this makes it possible for employers to continue providing the benefits you need, should you retire early. All of the money provided through the Affordable Care Act must be used to aid in the insurance of early retirees.

What Costs Are Covered

A range of different costs can be covered using funds provided through the Affordable Care Act. These include costs related to prescription drugs, hospitalization, surgery and general medical care.

Eligible Plans

Employer-sponsored plans eligible to benefit from the Affordable Care Act can take a number of forms, and can be either self-funded or insured plans. Plans sponsored by private institutions, nonprofits, state and local governments, as well as unions and religious organizations, can apply to provide health care to early retirees.

How Benefits are Distributed

The benefits provided by the Affordable Care Act are available to you only through employer-sponsored health plans. Therefore, you can only receive benefits if your employer chooses to enroll in the reinsurance program. In addition, an employer's plan must document claims made, and establish programs for individuals with chronic conditions that entail expensive coverage. Participating plans may be audited to ensure that funds are being handled responsibly.

Application Duties

Individual early retirees do not apply for coverage under the Affordable Care Act. Rather, if you hope to benefit from the provisions of the legislation, the plan subscribed to by your employer or your union must apply to the Department of Health and Human Services. The plan must use the provided funding to lower your health costs, including a decrease in the price of deductibles, premium contributions or co-payments.

Effective Dates

The program established by the Affordable Care Act is effective June 23, 2010, and covers early retirees retroactively for one year preceding that date. If you retired after June 23, 2009, you could be eligible for coverage. The program ends on January 1, 2014. At that point, health insurance exchanges are expected to provide other options for those who enter retirement early.

Robert Foreman