Embracing the Exchange: The Changing Face of Retiree Health Care
Private exchanges for active employees are all the buzz, but the concept has been in play in the retiree space for some time – and more and more employers are showing interest.
The individual market for Medicare-eligible retirees dates back to the introduction of the Medicare Part D program in 2006, but rising health care costs and federal health care reform have led a growing number of employers to consider the exchange model as a cost-effective way to provide health coverage to their retirees, according to the Aon Hewitt 2013 Retiree Health Care Survey of 548 private and public plan sponsors representing 3.8 million retirees.
Key provisions of the law won’t take effect until at least 2014, but nearly two-thirds of survey respondents have already begun reassessing their long-term retiree health strategies. Among those that have decided to make changes in how they provide coverage to their post-65 retirees, more than 40% plan to replace their traditional group retiree health benefit with one that directs retirees to the individual market, often giving them a defined contribution subsidy to offset the cost. More than half of those looking to take action in the future indicate strong interest in the exchange-based DC approach.
That doesn’t mean plan sponsors are throwing retirees to the wolves. Recognizing the need to help retirees navigate the often confusing world of health care, 66% of employers are looking online casino to provide guided access to the individual Medicare market. This can easily be facilitated through a private retiree exchange like Aon Hewitt Navigators®, which gives Medicare-eligible individuals access to free expert guidance to help them compare coverage options and enroll in the coverage that best meets their needs.
Pre-Medicare retirees are likely to find themselves shopping through an exchange, too, as 34% of respondents say they are considering a similar strategy for providing health care benefits to that population. Aon Hewitt can also assist these individuals in finding, evaluating and enrolling in state-sponsored exchanges in time for January 1, 2014.
Now that the legal and political landscape of the PPACA has largely been clarified, we expect to see a much greater movement toward the exchange-based retiree health care model. As plan sponsors look to hold the line on costs, while continuing to provide retirees with a valued benefit, they are likely to recognize the immense potential afforded by retiree exchanges to create significant savings opportunities for all stakeholders while providing greater choice and control to retirees.