Employers Moving Towards Exchange Based Strategies for Retiree Medical Programs

exchangeA recent survey by Aon Hewitt has found that most employers are considering a switch to exchange-based individual market strategies for retiree medical programs due to changes caused by the new health care reform law. The move would open up access to the individual Medicare plan market. Aon Hewitt’s survey found that about 60 percent of employers are reviewing their retiree healthcare strategies to find ways to leverage new opportunities found in the wake of the Patient Protection and Affordable Care Act (PPACA).

Over 60 percent of employers planning changes are either already implementing or considering implementing an individual market strategy that would leverage health exchange partnerships. About two-thirds of Medicare-eligible retirees are enrolled through the individual market.

“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.”

Additionally, 65 percent of plan sponsors are planning to consider or implement an exchange strategy for pre-Medicare retirees moving into 2014. The move would be to capitalize on the new state-sponsored exchanges and other market reforms under the PPACA. Employers are also considering alternative strategies including Medicare Part D and Excise Tax Mitigation strategies.

in Health Insurance]
Joshua Bjerke
Joshua Bjerke, from Savannah, Georgia, focuses on articles involving the labor force, economy, and HR topics including new technology and workplace news. Joshua has a B.A. in Political Science with a Minor in International Studies and is currently pursuing his M.A. in International Security.