The Centers for Medicare & Medicaid Services (CMS) have announced new a Cost Threshold and Cost Limit under the Early Retiree Reinsurance Program (ERRP). The new Cost Threshold will be $16,000, up from the current level of $15,000. The new Cost Limit will be $93,000, up from $90,000. The new Threshold and Limit are effective for plan years beginning on or after October 1, 2011.
The CMS also recently issued new guidance for plans on how to comply with the maintenance of contribution requirement under the ERRP. The guidance provides flexibility in satisfying the requirement, while also helping to ensure that a plan does not violate the prohibition against using ERRP reimbursement as general revenue. To the extent a plan is unable to use the maintenance of contribution approaches described in the new guidance, the plan may demonstrate compliance in other ways, provided that upon audit the plan can demonstrate how its approach is consistent with the ERRP statutory and regulatory requirements.
The guidance identifies the plan years for which a plan must comply with the maintenance of contribution requirement, the costs that are to be used to determine the level of contribution toward the plan, the baseline period that may be used to determine the required contribution level, and various methodologies a plan may utilize to measure the maintenance of contribution. Examples are also provided in the guidance.
Plans participating in ERRP should evaluate their maintenance of contribution approaches in light of this new guidance.
This is a summary of the guidance. A more detailed explanation can be found on the Towers Watson website.
Horizon Actuarial Services, LLC is an independent company and is not affiliated with Towers Watson.
The CMS also recently issued new guidance for plans on how to comply with the maintenance of contribution requirement under the ERRP. The guidance provides flexibility in satisfying the requirement, while also helping to ensure that a plan does not violate the prohibition against using ERRP reimbursement as general revenue. To the extent a plan is unable to use the maintenance of contribution approaches described in the new guidance, the plan may demonstrate compliance in other ways, provided that upon audit the plan can demonstrate how its approach is consistent with the ERRP statutory and regulatory requirements.
The guidance identifies the plan years for which a plan must comply with the maintenance of contribution requirement, the costs that are to be used to determine the level of contribution toward the plan, the baseline period that may be used to determine the required contribution level, and various methodologies a plan may utilize to measure the maintenance of contribution. Examples are also provided in the guidance.
Plans participating in ERRP should evaluate their maintenance of contribution approaches in light of this new guidance.
This is a summary of the guidance. A more detailed explanation can be found on the Towers Watson website.
Horizon Actuarial Services, LLC is an independent company and is not affiliated with Towers Watson.
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