Employers Race for Retiree Funds

The Wall Street Journal reports:

Big employers shaped the health overhaul bill to tap a $5 billion fund to offset the cost of health benefits for early retirees. Now, some companies worry the early-retiree fund will be exhausted quickly.

Starting this month, employers can tap into a federal fund that will reimburse up to 80% of certain health costs for retirees between the ages of 55 and 64 until 2014. The provision was designed to encourage employers to continue offering insurance to early retirees who aren't yet eligible for Medicare. General Electric Co., the state of California and a group that manages benefits for retired union auto workers are among those preparing to apply.

The program illustrates how employers shaped the sweeping legislation in ways that are only now coming to light. In early versions of the bill, retirees were the only ones who could receive the money, and employers were explicitly prohibited from using it to offset their health-care costs.

But a coalition including Verizon Communications Inc., United Parcel Service Inc. and other employers persuaded House and Senate Democrats to remove that restriction so companies could use the money, too.

Consultants who have helped hundreds of employers prepare applications for the money say applicants anticipate the funds will run out before the program is scheduled to end in 2014. They're pushing employers to get their applications filed as soon as a final application form is released, with the hope that early filers have the best chances of securing money.