Individual Exchange Models Offer Wider Selection of Plans and Provide Significant Savings to Employers and Retirees
At a time when the number of employers planning to re-evaluate their long-term retiree health strategies is at an all-time high, a new survey by Aon Hewitt underscores the value and significant savings opportunities that retiree health exchanges can offer both plan sponsors and retirees.
A new Aon Hewitt survey of 550 companies covering almost 4 million retirees shows more than 60 percent of employers are reassessing their long-term retiree health strategy in response to rising health care costs and mandated changes from the Patient Protection and Affordable Care Act (PPACA). Approximately 20 percent of employers currently offer guided access to the individual Medicare retiree plan market through an individual health exchange and another two-thirds are considering this strategy for the future. According to Aon Hewitt, employers can potentially reduce their gross retiree medical spend by 20 to 50 percent per year by transitioning retirees to this type of model.
“The economics of providing traditional employer-sponsored retiree health coverage are changing, and employers are seeking the most cost-effective and tax-efficient delivery models,” said John Grosso, a senior vice president in Aon Hewitt’s Health & Benefits practice. “Retiree exchanges provide access to these individual market efficiencies, along with a wider choice of health plans than exists in the traditional employer-provided retiree health plan. Very often, retirees can purchase individual Medicare Advantage, Medigap or Medicare Part D plans at lower rates than the employer can offer for comparable coverage due to the federal subsidies, Medicare Part D program enhancements and market-based competition found in the individual market.”
In addition to having access to a wider range of options, Aon Hewitt estimates that retirees can save an average of $1,000 each year when purchasing their health benefits through individual retiree exchange. For example, Aon Hewitt Navigators, a comprehensive retiree health care exchange that has serviced more than 250,000 retirees since 2010, offers access to more than 80 insurance carriers and 3,300 different plans, plus personalized support to ensure participants choose the best plan to meet their individual needs. To help retirees navigate among the hundreds of plan choices and combinations available in the individual marketplace, Aon Hewitt Navigators offers seasoned benefits advisors who not only help retirees choose a plan during open enrollment, but can assist them if they have questions or concerns throughout the year. Of the retirees Aon Hewitt Navigators served in 2012, 92 percent indicated they were satisfied with their overall experience.
“In our experience, retirees appreciate having more options and more money in their wallets,” said Matt Mann, general manager of Aon Hewitt Navigators. “At the same time, employers are looking to balance retiree needs with cost and other business pressures. Retiree health exchanges enable employers to successfully do both, which is why they are becoming an attractive delivery vehicle for plan sponsors to consider now and going forward.”
About Aon Hewitt
Aon Hewitt is the global leader in human resource solutions. The company partners with organizations to solve their most complex benefits, talent and related financial challenges, and improve business performance. Aon Hewitt designs, implements, communicates and administers a wide range of human capital, retirement, investment management, health care, compensation and talent management strategies. With more than 29,000 professionals in 90 countries, Aon Hewitt makes the world a better place to work for clients and their employees. For more information on Aon Hewitt, please visitwww.aonhewitt.com.
Source: PR Newswire