Healthy, Wealthy, and Wise: Possibilities for Workers Retiring Early

What does it mean for recruiters if more American workers are able to retire early?  How does early retirement shake up the current model of a working life?  Would an increase in early retirement lead to job growth within any sectors of the economy?

For many older workers, a key contributor to their confidence in retiring is their employer’s health care policy.  As part of broader talks about health care, the United States Department of Health and Human Services is trying to address health issues facing workers of retirement age.

Health and Human Services Secretary Kathleen Sebelius released a new report showing that the Early Retiree Reinsurance Program (ERRP) created by the Affordable Care Act is reducing health care costs for early retirees.  As of December 31, 2010, more than 5,000 employers had been accepted into ERRP, more than $535 million in health benefit costs have been reimbursed through the program, and those payments have helped benefit more than 4.5 million Americans.

“The Early Retiree Reinsurance Program is helping to control health care costs and protect coverage for early retirees and their families,” said HHS Secretary Kathleen Sebelius. “This program is providing critical financial relief to help states, private employers and other organizations preserve access to affordable health coverage for millions of Americans.”

This funding provides financial assistance for health plan sponsors – including state and local governments, for-profit companies, schools and other educational institutions, unions, religious organizations and other non-profits – to help early retirees and their families maintain access to quality, affordable health coverage.  The largest share of 2010 reimbursements went to governments, including state and local governments, school districts and other local agencies.

The percentage of large firms providing workers with retiree health coverage dropped from 66 percent in 1988 to 29 percent in 2009.  Many Americans who retire before they are eligible for Medicare without employer-sponsored health coverage see their life savings disappear because of medical bills and exorbitant rates in the individual health insurance market.  Health insurance premiums for older Americans are over four times more expensive than those for young adults, and the deductible these enrollees pay is, on average, almost four times that in a typical employer-sponsored insurance plan.