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Audit (A-05-12-00039)

01-10-2014
Jersey City, New Jersey, Did Not Always Comply With Early Retiree Reinsurance Program Requirements

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Summary

Jersey City, New Jersey (the City), incorrectly requested and received $130,000 in Early Retiree Reinsurance Program (ERRP) reimbursements on the basis of claims that were not in compliance with Federal requirements and the Center for Consumer Information Insurance Oversight (CCIIO) guidance. However, the City's use of the ERRP reimbursements was in compliance with Federal requirements and CCIIO guidance.

CCIIO, a part of the Centers for Medicare & Medicaid Services within the Department of Health and Human Services, is responsible for administering the ERRP. Claims submitted by plan sponsors for ERRP reimbursement must be based on actual costs incurred for providing health benefits to early retirees and their spouses, surviving spouses, and dependents. Early retirees must meet specific eligibility requirements. The Affordable Care Act requires plan sponsors to use ERRP reimbursement to reduce the sponsor's health benefit premiums and health benefit costs, to reduce the plan participants' health benefit premiums and health benefit costs, or a combination of both. Plan sponsors must not use ERRP reimbursements as general revenue.

The City, the plan sponsor, offered self-funded health benefits to eligible employees, retirees, and their dependents. The City did not have adequate policies and procedures to ensure that it submitted claims for reimbursement of only allowable cost incurred for individuals who met the definition of an early retiree and their spouses and dependents.

We recommended that the City (1) refund $130,000 in incorrectly requested and received ERRP reimbursements, (2) work with CCIIO to correct any subsequent ERRP reimbursement requests that did not comply with Federal requirements and CCIIO guidance, and (3) develop and implement policies and procedures to help ensure that the City claims only for allowable health benefit costs incurred for individuals who meet the definition of an early retiree. The City partially agreed with our findings and did not directly address all of our recommendations.

Copies can also be obtained by contacting the Office of Public Affairs at Public.Affairs@oig.hhs.gov.

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