Last year, President Barack Obama created a fund that was to be used to help subsidize the cost of health care for retired people who did not yet qualify for Medicare. The idea was that this fund would be there until 2014, when a national system of health care was set up. However, it looks as though this money could completely run out before the end of this year, 2011.
Right now, the federal government is paying 80% of the insurance costs for retirees who are between the ages of 55 and 65. One must be at least 65 years of age, in most cases, in order to qualify for Medicare. It is estimated that thousands of baby boomers will sign up for Medicare each and every day in 2011, and it has been said that this will put a big strain on the ability for Medicare to continue to serve the health care needs of the people who it was designed to assist.
Even though a high number of people will qualify for Medicare this year, there still remain plenty of people who aren’t quite at the right age receive it. The result is that the government has been paying as much as $90,000 a year through what has been called a stopgap measure.
There were never any promises made that this money would last until the health care exchanges were set up and accessible. I believe the idea was that it could, potentially, last that long, or that it would at least help some people for a few years, in the meantime. The fund helps employers be able to afford to pay for covering the health care cost of their employees who have retired. A whole lot of employers, however, have decided to abruptly end the health insurance benefits that they previously were giving their retired employees.
A report said that this health fund paid out a total of $535 million dollars to 253 businesses and organizations in 2010. It is unknown exactly how much each one got, but it is known that some of the recipients were Johnson & Johnson, Alcoa, and General Electric. It is also known that government organizations received 56% of the money from this fund.
The biggest amount went to the California Public Employees’ Retirement System, (or CalPERS), an organization that has been in the news in the past few years quite often in regards to the large amounts of money certain people were getting from CalPERS as part of their retirement benefits. CalPERS got a total of $57.8 million. Another $38.6 million went to The State of New Jersey pension office, and $34.9 million went to Georgia’s employee health benefit plan. Kentucky got $29.7 million and Texas received $21 million.
It is known that more than 5000 more organizations have also been approved to receive money from this fund. If they all are approved, and remove the money as fast as the first group is doing, the fund could be entirely depleted this year. No one knows what will happen to the retirees who are depending on this fund, once it is gone.
Image by Lars Plougmann on Flickr