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North Carolina employers vie for a piece of the health reform pie

Maryalene LaPonsie | November 24, 2010

Health reform seems to have a little something for everyone: seniors, children, the disabled, working families and businesses all benefit. While doling out the subsidies and tax incentives, Congress hasn't forgotten the plight of the early retiree. Yes, those folks who regrettably had to retire at age 55 and spend their days doing something other than working for "the man" are also feeling a little love from Washington.

Short term insurance for early retirees

True, it is easy to joke about early retirees -- that they left work early and enjoy a life of luxury puttering around on their yachts all day. Poor them! However, in all fairness, the reality for most people in this category is much different.

Many "early retirees" are not retired by choice. When the pink slips are handed out, senior employees who earn more are often the first to be squeezed out of a job. What starts as unemployment soon morphs into early retirement. Although age discrimination in hiring is illegal, ask any unemployed 62-year-old about his prospects competing against 30-somethings for available jobs in today's weak economy. He'll tell you, it's not a pretty picture.

So what happens to these "early retirees?" Some live off unemployment for a while before burning through their savings. If they are fortunate, they might have been offered an early retirement buy-out that allows them to dip into a pension or nest egg early without tax penalties.

Medical insurance can be a different story. For those who are stuck on the unemployment lines, medical coverage is either non-existent or comes by way of short term insurance such as a COBRA health plan or an individually purchased health insurance policy. If someone has been lucky enough to garner an early retirement offer, they may be able to receive retiree health benefits which will provide coverage until they reach age 65 and become Medicare eligible.

How health reform helps early retirees keep their medical coverage

Although many businesses offer retiree health benefits, there is no law requiring them to do so. As health care costs skyrocket, many companies have reduced benefits or outright eliminated their retiree health insurance programs. The Charlotte Observer reports that federal statistics show the percentage of large companies offering this retirement perk has dropped from 66 percent in 1998 to just 29 percent in 2008.

To keep other businesses from following suit, the Affordable Care Act is offering subsidies to companies that continue to offer retiree health care benefits. In North Carolina, it was recently announced that 29 employers have signed up for a share of $5 billion in federal dollars being made available nationwide for short term insurance subsidies.

The employers include some of the state's largest businesses as well as universities, non-profits and municipalities. Some of the big names are Research Triangle International, Duke Energy, Progress Energy and Cabarrus County. The federal funding is expected to offset approximately 25 percent of the cost to insure early retirees for the next two years.

However, not all employers are jumping at the chance to score some federal money. Duke University declined the opportunity to apply for the subsidies after it calculated the cost of completing all the government-required paperwork at $20,000.

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