If you’re evaluating a Medicare exchange solution for your retirees, you may be wondering how much time the transition will take so you can figure out when to get started. After five years of experience at Extend Health, we have developed a process and a recommended timeline that works. If you are planning to move your retirees to coincide with the change to the RDS taxable status, this article will help you understand what you need to do to make the transition before the change takes place on January 1, 2013.

The actual start date for the process is determined by the start date for new insurance benefits. Employers can choose any start date they wish. In an ideal world the process would take place over a five to six month period, divided into four phases as follows, with key milestones in place during each phase:

  • Planning: Starts four to five months before enrollment begins (seven to nine months before new coverage start date) and lasts six-eight weeks
  • Retiree Education: Starts 45 days before enrollment begins and lasts six to seven weeks
  • Enrollment: Starts 90 days before start of new coverage. Employers have the option of designating the dates or length of time during which they want enrollment to take place; we recommend allowing four to six weeks.
  • Post Enrollment: The employer’s responsibilities during this phase are minimal. Extend Health takes over all administrative tasks for the newly-enrolled retirees.

Phase One: Planning

Ideally, this phase takes place four or five months before enrollment begins. Once the decision to move forward has been made, there are a number of key elements that need to be put in place before announcing the change, including:

  1. Employer and Extend Health team meet to plan transition
  2. Do data analysis to determine retiree HRA funding amounts
  3. Write and distribute employer announcement of benefits change

Phase Two: Retiree Education

This phase, which starts 45 days prior to enrollment, is focused on making sure retirees understand the changes to their benefits and the process for enrolling new coverage. During this phase:

  1. Getting Started Guide, first Extend Health mailing, delivered to retirees. Includes welcome letter, FAQ, and workbook to assist in creating profile
  2. Retirees create profile either on-line or on the phone with a benefit advisor
  3. Retirees schedule enrollment appointments
  4. Retiree on-site meetings take place

Phase Three: Enrollment

The start date of the enrollment phase is calculated by looking at the start date for new coverage and counting back 90 days. The employer can choose any start date it likes. For example, if an employer wants new coverage to start on June 1, then enrollment should begin on March 1. This allows time for insurance carriers to process the new applications and mail insurance cards to retirees in time for the start of coverage. During this phase:

  1. Retirees receive the Extend Health Enrollment Guide, including Medicare basics plan education, what to expect on the enrollment call, and appointment confirmation.
  2. Enrollment calls take place.
  3. Extend Health delivers reminder post cards and (if necessary) certified mail to those retirees who do not respond in a timely manner.

Phase Four: Post-Enrollment

The employer’s role is minimal during the post-enrollment phase. Retirees often have questions during this phase but Extend Health has a team of benefit advisors and customer service representatives who will help them with carrier or HRA issues, or any future changes to their medical and prescription drug requirements. During this phase:

  1. Extend Health delivers plan selection confirmation letter
  2. Insurance carriers send out welcome guides and new insurance cards
  3. Extend Health delivers a welcome letter and the HRA packet

Example timeline

If an employer wants new retiree benefits to start on September 1st, the timeline for a smooth transition would look something like this:

  • Phase 1 planning begins between February 15 and February 28
  • Phase 2 retiree education begins April 15
  • Phase 3 enrollment begins June 1
  • Phase 4 post-enrollment begins with the start of new coverage on September 1

Visit Extend Health to use the ExtendExchange™ platform – the nation’s largest private Medicare exchange.

This is the second post written for Extend Health by Avalere. We asked them to take a look at the changes made by the reform legislation to the Retiree Drug Subsidy, and the potential impact to both retirees and their employer sponsors.

Health Reform and the Changes to the Retiree Drug Subsidy: Potential Implications for Seniors

The Patient Protection and Affordable Care Act (ACA) makes several changes that will affect drug coverage for retirees.  Specifically, you may have heard about changes to the Retiree Drug Subsidy (RDS) and wondered what they might mean for your company’s retiree benefits. 

The RDS was part of the Medicare Modernization Act (MMA), which Congress passed in 2003.  It is a tax-free Medicare payment to employer-sponsored plans, worth 28 percent of allowable drug costs between $310 and $6,300 for each covered retiree not enrolled in Medicare Part D in 2010.  RDS payments were excluded from the employer’s gross income for the purposes of corporate income tax, and employers were also allowed to claim a business deduction for retiree prescription drug expenses even though they also received the federal subsidy to cover a portion of those expenses. 

The ACA changes the tax treatment of the RDS beginning in 2013.  Rather than receiving both the subsidy and the tax deduction for retiree prescription drug coverage, the amount allowable as a deduction will be reduced by the amount of the federal subsidy received.  Some employers may choose to eliminate their retiree drug coverage in response to this change.  However, the impact of these changes may be limited since a significant portion of RDS-covered retirees belong to groups that are exempt from federal taxes, such as state and local governments and non-profits.  Read the rest of this entry »