Benefits

Employers Considering Exchanges for Retiree Health Care

September 26, 2012 (PLANSPONSOR.com) – Most employers are considering implementing retiree health care strategies that open access to the individual Medicare plan market through health care exchanges, according to a survey by Aon Hewitt.

By Rebecca Moore editors@plansponsor.com | September 26, 2012
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The survey of nearly 450 private and public plan sponsors representing 5.8 million retirees found six in 10 employers have reviewed or are currently reviewing their retiree health care strategies and are considering alternatives in order to leverage opportunities created by the Patient Protection and Affordable Care Act (PPACA). Of those employers planning changes, 63% are currently implementing or are considering moving towards an individual market strategy, where they would leverage a health exchange partnership.   

Aon Hewitt estimates that approximately two-thirds of Medicare-eligible retirees in the U.S. are already enrolled in a Medicare plan through the individual market.  

The survey found 65% of plan sponsors said they will at least consider leveraging an exchange strategy for their pre-Medicare retirees some time after 2013, with or without a subsidy, in order to take advantage of the opportunities created through new state-sponsored health care exchanges and additional PPACA market reforms.  

“With the Supreme Court ruling largely upholding the PPACA, plan sponsors have the opportunity to reassess their role as a provider of retiree health care benefits and consider changes that will better position their retiree health care programs for the future,” said John Grosso, health care actuary and leader of the Aon Hewitt Retiree Health Care sub-practice. “The combination of changes to the Medicare Part D and Medicare Advantage programs, along with the choice, competition and generally favorable rating rules, have made the individual market very cost-effective compared to the group insurance program. We expect that there will be a similar opportunity for pre-Medicare retirees beginning in 2014.”

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