Welcome to Scribd, the world's digital library. Read, publish, and share books and documents. See more
Standard view
Full view
of .
Look up keyword
Like this
0 of .
Results for:
No results containing your search query
P. 1
Retiree Health Care Survey 2013

Retiree Health Care Survey 2013

Ratings: (0)|Views: 45 |Likes:
Published by Ann Weiler
Retiree Health Care Survey 2013
Retiree Health Care Survey 2013

More info:

Published by: Ann Weiler on Aug 06, 2013
Copyright:Attribution Non-commercial


Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less





News From Aon
 Media Contacts:
Maurissa Kanter, 847-442-0952,maurissa.kanter@aonhewitt.com  Amy Ochalski, 847-771-4225,amy.ochalski@aonhewitt.com 
For Immediate Release
Aon Hewitt Survey Shows Growing Number of Companies Favoring Individual Market-BasedStrategies for Post-65 Retirees
LINCOLNSHIRE, Ill., August 6, 2013 –
In response to rising health care costs and mandated changesbrought about by the Patient Protection and Affordable Care Act (PPACA), a new survey from Aon Hewitt, theglobal talent, retirement and health solutions business of Aon plc (NYSE: AON), shows that many U.S.organizations have or are seriously considering sourcing post-65 retiree health care benefit coverage throughthe individual Medicare plan market. Aon Hewitt’s annual Retiree Health Care survey of 548 companies covering almost 4 million retirees showsmore than 60 percent of employers are reassessing their long-term retiree health strategies due to thePPACA. Of those companies that have already decided to make strategy changes for their post-65 retirees,more than 40 percent have moved forward with one that will direct retirees to the individual market for coverage, oftentimes accompanied by a defined contribution subsidy. Of those companies expecting to makechanges to their post-65 retiree strategies in the future, more than half indicate strong interest in thisapproach.“With the PPACA legal and political landscape generally clarified, employers are looking to control cost,manage risk and source coverage through the most efficient means possible,” said Maureen Scholl, CEO of Health Care Exchanges for Aon Hewitt. “Individual market-based retiree health care sourcing strategies cancreate significant savings opportunities for all stakeholders. We expect to see many employers apply thesestrategies where possible and supplement them with modified group-based programs for those retireepopulations where individual strategies do not make sense.”
Post-65 Retiree Benefit Strategy ChangesRetiree Benefit Strategy Companies that havealready decided tomake a strategychangeCompanies that areexpected to make astrategy change in thefuture
Individual Market-Based Approaches
Defined contribution strategy with individualmarket-based benefit sourcing32% 29%Terminating drug coverage 6% 10%Individual Part D enrollment with out-of-pocket costreimbursement1% 7%Terminating drug coverage with Part D premiumsupport3% 7%
Group-Based Approaches
Group-based Medicare Part D plan (EGWP) 36% 21%Group-based national Medicare Advantage withRDS8% 10%Group-based national Medicare Advantage withMedicare Part D (EGWP)6% 14%
8% 2%
  Aon Hewitt’s survey shows many companies are also considering changing their pre-Medicare retireestrategies to leverage the individual market in the future. Of those employers contemplating changes to their pre-65 retiree coverage, 34 percent favor a defined contribution strategy with individual market/publicexchange-based benefit sourcing in the future and 30 percent favor eliminating pre-65 retiree coverage andsubsidies altogether. Thirty-three percent do not anticipate a future change in their strategy.
Medicare Part D Strategies
 Aon Hewitt’s survey shows that 53 percent of employers have altered or plan to alter their Medicare Part D or broader post-65 retiree benefit strategies. Thirty-six percent of companies that have made changes since2010 have moved to a group-based Medicare Part D plan (EGWP) and another 21 percent of those stillcontemplating changes anticipate moving to the EGWP in the future. According to Aon Hewitt’s survey, the percentage of employers that filed to collect the federal Medicare PartD Retiree Drug Subsidy (RDS) has dropped from 63 percent in 2010 to 48 percent in 2013. Only 18 percentplan to file for the subsidy longer-term.“The elimination of the tax-favored status of the RDS for 2013, coupled with the PPACA-prescribedimprovements to the Medicare Part D program, created the impetus for employers to take action,” notedMilind Desai, retirement actuary at Aon Hewitt.” While many organizations will continue to rely on group-based sourcing strategies for their retiree populations, they will likely migrate toward ones that are more costeffective.”
Medicare Advantage Strategies
 Aon Hewitt’s survey shows just 34 percent of employers currently offer local/regional or national group-basedMedicare Advantage plans to any of their post-65 retirees, and just 6 percent of employers say they consider Medicare Advantage to be a viable group-based strategy going forward.However, 38 percent of employers say they would consider replacing their current group-based Medicaremedical indemnity supplement strategies with a national Medicare Advantage PPO if there would be nochange in retiree benefits and if it would generate material savings in the near-term.“In the past, many employers leveraged Medicare Advantage plan strategies because the savings could besignificant,” said John Grosso, health care actuary and leader of Aon Hewitt’s Retiree Health Care task force.“Over time, these plans experienced significant challenges as federal funding cuts took place, which led toincreases in plan premiums, reductions in benefits and plans exiting certain locations. While PPACAintroduced a number of changes to the Medicare Advantage program, employers generally want to seeconsistent performance over time and a stable federal funding commitment before investing in these group-based strategies for the long-term.”
Settlement Strategies
Settlement strategies contemplate a retiree benefit “buy-out” that enable organizations to fully or partiallyeliminate their ongoing retiree medical commitment. Examples of settlement strategies that employers haveconsidered include purchasing life annuities to provide a fixed income stream in lieu of ongoing medicalcoverage, establishing and funding a VEBA trust to support continued retiree benefits, or making direct cashlump-sum payments to retirees. According to Aon Hewitt’s survey, more than a quarter of companies said they would consider a retiree healthcare settlement strategy for all or a portion of their retiree group if the market environment could support it ona cost-effective basis.“We saw tremendous pension settlement activity during 2012, and that trend is continuing in 2013.Companies looking to shrink benefit liabilities on their balance sheet may explore the viability of settling their retiree health care obligations as well,” said Desai. “At present, there are a number of tax, legal and markethurdles that limit the feasibility of settling retiree medical program commitments in a cost-effective manner,but this may change in the future.”

You're Reading a Free Preview

/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->