Aon Hewitt unveils new health plan design for retirees
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A new retiree health care benefits design unveiled Thursday by Aon Hewitt and linked to its private health insurance exchange will give Medicare-eligible retirees greater financial incentives to select more cost-effective plans, the benefit consultant said.
Traditionally, employers will credit retirees' health reimbursement arrangements with a flat dollar amount. The retirees then will tap the HRAs to pay premiums for plans offered through the exchange and/or out- of-pocket expenses, such as deductibles and coinsurance.
“These approaches leverage a one-size-fits-all reimbursement strategy regardless of retirees' individual health care needs or local market efficiencies. This generally results in overspending by the employer and inefficient health care selections by retirees,” Aon Hewitt said in a statement.
By contrast, under the new approach, the employer would credit the HRA with a much smaller amount, which the retirees could apply toward the premium of the exchange plans they selected.
Retirees would then receive additional credits to cover out of pocket expenses starting at a set amount and going to a set ceiling.
Through that approach, retirees would have a greater financial incentive to opt for more cost-efficient plans, Aon Hewitt said in the statement.
“It creates a financial incentive for retirees to find value in the individual market through the exchange … as opposed to using employer reimbursement to simply purchase high-cost, first-dollar coverage that most retirees don't actually need,” John Grosso, head of Aon Hewitt's retiree health care task force in Norwalk, Connecticut, said in a statement.
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