WASHINGTON – More than 100 Illinois businesses, local governments and labor unions will be among the first to receive new federal assistance intended to help with health care costs for early retirees who aren't old enough for Medicare.

In all, 2,000 employers across the U.S. who offer health coverage for their retirees were the first selected to receive some of the $5 billion in financial assistance available to pay for medical claims for retirees ages 55 and older, along with their spouses and dependents.

More applications for the new Early Retiree Reinsurance Program are still being reviewed in the order they arrived, according to U.S. Health and Human Services Secretary Kathleen Sebelius, who announced the first recipients Tuesday.

The assistance program was created under the Patient Protection and Affordable Care Act to make it easier for recession-squeezed employers to offer retiree coverage – and to prevent more of those employers from dropping retiree coverage as health care costs have continued to skyrocket.

The program is intended to bridge the gap for early retirees who can't afford coverage on the open market, until 2014, when retirees will be able to choose additional coverage options through new health insurance exchanges being created under health care reform legislation.

The percentage of large businesses providing retiree coverage has fallen from 66 percent in 1988 to 29 percent last year. Sebelius said.

"Many Americans who retire before they are eligible for Medicare see their life savings disappear because of medical bills and exorbitant rates in the individual health insurance market," she said.

Applications for the new program have been received from more than half of the nation's Fortune 500 companies, all major unions and state and local governments across the nation, she said.

Among the 130 employers first selected in Illinois were Solo Cup, the cities of Chicago, Bloomington, Decatur and Peoria, Northwestern University, Illinois Central Railroad, Motorola, Prairie Farms Dairy and several labor unions.

The state of Illinois applied but wasn't on the list of first recipients.

"We're still waiting to hear back on our status," said Stacey Solano, spokesman for the Illinois Department of Healthcare and Family Services.

The city of Champaign offers health coverage to its retirees and considered applying for the program but decided to pass, according to Lori Bluhm, city assistant human resources director.

Bluhm said the city weighed the potential benefits against the additional requirements on its health plan and the unknowns connected with the program.

"At this point, it just wasn't clear that it was going to be any benefit to the city or our retirees," she said.

The program will reimburse employer health plans up to 80 percent of claims costs for health benefits between $15,000 and $90,000, with the first payments expected to be made in the early fall, Sebelius said.

The program is open to self-funded and insured plans, including private businesses, state and local governments, nonprofit organizations, religious organizations, unions and other employers.

Sebelius said this assistance "couldn't have come at a more critical moment."

The health premiums for older adults on the open market are four times what they cost younger people, and deductibles are now four times what they'd face under employer-sponsored plans.