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Early Retiree Coverage as Part of Active Group Health Coverage


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Working with a BCBS group health insurance contract that gives employers the chance to elect "Pre-65 Retirees (Before Eligible Retiree Coverage) as a special eligibility / coverage category in addition to the default coverage for active, full-time employees working 30 or more hours per week.  There is a box for checking yes or no but no real request for additional information or parameters.  Employer has in the past attached a simple addendum explaining their general early retiree health insurance benefits (not sure if BCBS has required / requested that they do that or simply what has happened in the past).  In any event, the employer's Pre-65 coverage is not spelled out under their retirement plan or other policies in any detail--i.e., it's just sort of loosely reflects how they have in the past decided to administer this coverage.  Included among this is a general understanding that coverage will not be provided to individuals who are eligible to elect early retiree pension benefits who are involuntarily terminated by the employer or quit to take another job and so are not truly "retiring."

 

Am wondering if this is common place or routine and, in particular, what sort of parameters, if any, BCBS places on Pre-65 Retiree eligibility?  BCBS is not being very forthcoming with how to think about their own contract / forms.  Thanks. 

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  • 3 weeks later...

Just wanted to bump this up to see if others have experience in selecting pre-65 retiree coverage as part of active employee plans.  Is this a routine option with BCBS plans throughout the country and, if so, does BCBS set any parameters with who is eligible?

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The option to allow pre-65 retirees health coverage is standard and can be found on the employer application for coverage.  If the employer decides to offer coverage to this class of employee all that is usually required is the authorization from the employer, no other information is needed.  What confuses/troubles me is the wording you use regarding the addendum explaining their policy and that no reference is made to it in any plan documents.  The plan documents provide the information as to who is eligible and by omission, which is not.

 

I have not seen the various documents, so please do not take this as gospel, but based on what you have said regarding who gets it and who does not, this does appear to be a problem for the employer.  Employer should make sure there is no gray area.

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Leevena,

Thanks very much.  I wholeheartedly agree with your comments.  Employer clearly intended for the addendum terms / provisions reflecting eligibility for pre-65 coverage to be part of the plan.  For whatever reason, the insurer failed to include that and simply noted something like "Early Retiree Coverage" under the Special Eligibility provisions without describing the terms at all.  We are going to be sure to fix that going forward.  (Ironically, insurer came back with very detailed provisions in the 2017 contract but they don't match what the employer's addendum set forth or what the employer has been using for eligibility in prior years.  I frankly think they just added in the provisions for somebody else's plan.)

In this particular case, the employer has a relatively low years of service requirement for pre-65 coverage--e.g., 10 years of service instead of the more typical 20 years that I'm used to seeing (and was included in the strange 2017 language added by the insurer).  Assuming we get the insurer straightened out on which terms apply to this plan, am I correct in understanding that the employer generally has broad discretion over setting the eligibility requirements for the pre-65 coverage?  I'm assuming the insurer could override if it felt there was an underwriting issue but that seems unlikely to me.  Thanks.

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I am a little nervous with the term "broad discretion" when referring to setting eligibility.  The plan administrator/employer needs to set the eligibility requirements in such a way that it does not discriminate against a certain person/persons.  If they are thinking about writing something other than "pre-65 and 10 years (or some other number of years) I would get a little nervous and ask for legal opinion.

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Thanks very much.  I was mainly thinking about minimum age (e.g., 55) and years of service (i.e., at least 10 rather than 20) which ties in with early retirement under their retirement plan.  Sounds like there is no reason to anticipate BCBS to object to 10 years rather than 20 years?

One thing that has been asked about is whether someone  that meets the age and service requirements needs to truly be "retired" and receiving early retirement benefits under the retirement plan in order to receive the pre-65 health coverage or is the employer required to also make coverage available to those who voluntarily terminate their employment and who have the required service to receive pre-65 coverage but go to work somewhere else (like say a competitor with a less generous health plan)?

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