With the end of the year just around the corner, we are taking a moment to look back at the most popular posts on the OneExchange blog this year.

Most-read topics included benefits administration, telemedicine, disease management programs, and types of benefits being offered, including student loan repayment, workplace perks such as snow days, and changing PTO policies. We also got to know more about exchange innovator Sherri Bockhorst, a managing director of Willis Towers Watson’s group exchange business.

Here are some interesting tidbits from the top 10 posts:

On workplace perks: “New parents no doubt perked up (pun intended) when companies offered such benefits as unlimited parental leave (Netflix) and $4,000 in “baby cash” for the birth of a newborn (Facebook).”

On telemedicine: “The average telemedicine visit costs between $40 and $49…. This compares favorably with a visit to a primary care doctor ($110) or a trip to the emergency room ($865).”

On biosimilars: “The potential benefit [from the FDA approving more biosimilars] is huge… biosimilars could result in over $44 billion in savings on biologics between 2014 and 2024.”

Read on for the complete list of the top 10 blog posts in 2016:

  1. “Panda Days” and Paid Time Off: What Perks Perk Up Employees
  1. Employers Look To Private Medicare Exchanges As Alternative To Group Retiree Health Coverage
  1. Meet Exchange Innovator Sherri Bockhorst
  1. Little Known Rule Allows Some Seniors To Change Medicare Advantage Plans When Plans Drop Their Doctors
  1. League Of California Cities Partners With OneExchange On New Private Exchange Offering
  1. Employers Add Student Loan Repayment To Benefits Offerings To Attract Millennials
  1. Employee Well-being In The Workplace A Priority For Employers In Coming Years
  1. More Private Exchanges Adding Disease Management Programs
  2. Reimbursement Issues Plague Biosimilars
  1. Telemedicine Benefits Remain Underutilized

A trend toward coinsurance over copays results in Medicare beneficiaries paying higher out-of-pocket prices for their prescription drugs. It also makes it harder for seniors to predict costs because drug prices fluctuate.

Unlike copays, which are flat rates, coinsurance rates are based on a percentage of total costs. Coinsurance was previously limited to higher cost specialty drugs, but its adoption in other drug tiers now is increasing.

According to an analysis from Avalere Health, reported in a recent article in Kaiser Health News, more than half (56%) of drugs covered under the Part D Medicare benefit will use a coinsurance model in 2016. Medicare Advantage plans are also making the change, but at a much lower pace. Just 26% of drugs offered through Medicare Advantage plans will require coinsurance in 2016.

Rising pharmacy costs have been a concern not just for seniors on Medicare, but for health care consumers and providers generally. Pharmacy Benefit Managers (PBMs) have been working to manage the rising cost of drugs to avoid passing on higher costs to employees.

To learn more about the Avalere analysis, click here. To read the complete article in Kaiser Health News, click here.

According to new data from Willis Towers Watson, 56% of U.S. employers are confident that the public exchange will be “a viable option” for pre-65 retirees within the next two years. The data comes from the 2016 Willis Towers Watson Emerging Trends in Health Care Survey, which gathered responses from 467 employers representing 12.1 million employees.

Additionally, the survey found that 72% of employers intend to make moderate to significant changes to their existing pre-65 retiree health benefits. The willingness of employers to make these changes can be attributed to the continued rise in health care costs for this segment of the employee population. In other words, costs rise, and employers need to take action.

In a recent article for Business Insurance, John Barkett, senior director of policy affairs for Willis Towers Watson, said, “Employers are seeking alternatives to providing their retirees with the same group health care coverage they offer active employees. Many employers have already transitioned their post-65 retirees to original Medicare plus private individual Medicare plans or are planning to. This keeps costs down and retiree satisfaction up. However, because Medicare is not available to younger retirees, employers are looking elsewhere for a solution.”

To read the article in Business Insurance, click here.

To read the complete press release from Willis Towers Watson, click here.

Two Towers Watson surveys reveal a notable disconnect between what retirees believe they were told by their employers about their retirement medical benefits when they retired and what employers say they offered retirees in education and information.

In March 2015, Towers Watson surveyed 3,384 retirees aged 65 and older who formerly worked at large and midsize employers. Previously, in September 2014, Towers Watson surveyed 144 HR executives at large and midsize employers that sponsor retiree medical benefits. The retiree survey showed that 43% said their employers took no steps at all to help them understand and manage the cost of retiree medical benefits before they retired; the employer survey showed that just 9% of employers acknowledged they offered no help.

Other issues that retirees claimed employers did not discuss with them included the reality of out-of-pocket costs, and financial planning resources and decision support tools that would be available to them.

According to John Barkett, a director for Towers Watson’s Individual Exchange line of business, the disconnect points to the need for employers to redouble their efforts to make sure retirees have crucial information that could affect their financial health in retirement.

“It’s evident that employers can do a better job of educating employees about retiree medical costs and benefit options as well as explaining more clearly the support retirees can expect with benefits after they’ve stopped working,” said Barkett.

For the full press release, click here.

We are happy to report that we’ll be serving the Ohio Public Employees Retirement System (OPERS) in 2016. For more details about OPERS and the transition, click here for the full press release.

Retirees receive funding for benefits for life

A new retiree medical exit solution announced March 24th by Towers Watson uses customized group annuities and an innovative transaction structure to overcome the traditional hurdles to an exit — with positive tax implications for employers and preservation of benefits for retirees.  Longitude Solution is available to existing and prospective clients of the Towers Watson OneExchange private Medicare exchange.

Both public and private sector employers have long sought an exit solution to address the high cost of retiree medical benefits as well as the many regulatory and legal obligations associated with a retiree medical program. Rising health care costs, especially for older individuals, make offering retiree medical increasingly unaffordable, even for the largest organizations.

In addition, retiree medical creates balance sheet liabilities and income statement expense while diverting management time from more strategic benefits strategies.

Why haven’t employers exited retiree benefits before?

The fact that more employers haven’t simply stopped providing the benefit speaks to the complexity and risk of an exit.

Public sector employers and many private sector companies have long-standing contracts with unions that guarantee funding of retiree medical benefits for life. Even without a union or written contract, no employer wants to be sued by its retirees.

Beyond the possibility of a lawsuit is the concern employers have about ending a benefit that seniors on fixed incomes depend on as well as the negative press that might be associated with doing that.

Hurdles (and their solutions) to an annuity-based exit

Employers and their benefits consultants have long known that the ideal way to exit retiree medical is through a group annuity. However, to be successful, the annuity would have to do the following three things: 1) end an employer’s legal obligation once and for all, 2) avoid adverse tax consequences for both employers and retirees, and 3) create economic value for both parties.

But before a group annuity could be part of a retiree exit solution, the following four hurdles had to be overcome:

Hurdle #1: Medical inflation is a risk that cannot be hedged, and an annuity for retiree medical benefits cannot be issued unless medical inflation risk has been eliminated.

Solution: Medical inflation risk is eliminated when an employer moves from defined benefit (DB) approach to a defined contribution (DC) plan because benefits are capped to a fixed dollar amount per year.

If the transition is made with Towers Watson’s OneExchange private Medicare exchange, the added benefit is that the employer has a platform for administering the annuity and retirees don’t have to change how they purchase plans and get reimbursed for medical claims.

Hurdle #2: Retirees do not pay taxes on medical benefits funded through a tax advantage account such as an HRA, but they would have to pay taxes on existing annuity benefits as income.

Solution: By specifying that distributions can only be used for medical insurance premiums and other medical costs, an employer can mirror its existing plan design while shielding distributions from taxation.

Hurdle #3: Employers cannot deduct the full annuity payment at the time of purchase because premiums paid for long-term contracts, like annuities, must be amortized for tax deductions.

Solution: The annuity solution includes a series of transactions that are commonly used in retirement benefit plans that make the purchase price deductible right away.

Hurdle #4: Employers must address commitment made to retirees before removing the retiree medical liability from the balance sheet.

Solution: The certificates issued under the annuity are irrevocable commitments that transfer an employer’s liability to the insurance company, eliminating the employer’s obligation.

Fulfillment of obligation, peace of mind

With these hurdles overcome, both public and private sector employers can use the Towers Watson annuity-based exit solution to fully exit their legal, accounting, and regulatory responsibilities. The solution should also give retirees peace of mind because they would have tax-free funding for medical benefits from a highly rated insurance company for the rest of their lives. 

This type of retiree medical exit solution is the end of a journey that many employers began decades ago — at the time, with no clear path to exit in sight — and can now finish, in a way that meets the needs of employers and retirees alike.

For more information about the Longitude Solution, read the article in Tower’s Watson Corporate Finance Matters.

BayBridge

The Bay Bridge at night, looking to its footings in Alameda County

 

 

 

 

 

 

 

 

 

 

Each year, Kathy Foster and team analyze the funds in their organization’s trust to figure out how long the money will last. More than 20,000 people rely on those funds when they retire – for income and health coverage – one of the biggest costs in retirement.

 

Foster is Assistant CEO of the Alameda County Employees’ Retirement Association (ACERA) – steward of the retirement benefits fund for the nation’s seventh largest county.

In February 2012, ACERA was one of California’s first counties to use a private Medicare exchange. A year later, ACERA is sharing how it made the decision, what the move entailed and taking a 20/20 look back to measure projections.

Read Building a Bridge to the Future: ACERA’S Retiree Medical Strategy.

Learn more about Towers Watson’s OneExchange solution for retiree healthcare.

>> Stay tuned later this week when the Extend Health blog gets a new name and look. <<

For a hint at what’s to come, check out our new look on Twitter – @OneExchange is the new face of the @ExtendHealth stream – tweeting all the healthcare, benefits & reform trends we’re known for.

The recent expansion of our Exchange Solutions business segment is a good opportunity to look back at the news from our private Medicare exchange over the past few years. Here are highlights from our early days to today.

Towers Watson Announces Expansion of Exchange Solutions Segment
1/23/2014

Towers Watson Acquires Liazon to Expand Private Benefit Exchange Offerings Through Multiple Channels
11/27/2013

Towers Watson Signs Agreement With Federal Government to Facilitate Public Exchange Enrollments
9/9/2013

Towers Watson Selects WageWorks to Administer Health Accounts on Towers Watson’s New Private Health Insurance Exchange
7/8/2013

Towers Watson Names Woody Sides Exchange Solutions Regional Vice President of Sales in the West
7/1/2013

California State Association of Counties Partners With Towers Watson
6/11/2013

Leading Health Insurers to Provide Health Plans on New Towers Watson Private Exchange for Active Employees
4/29/2013

Towers Watson Kicks Off “Ready for 2014: Road to Exchange Solutions” Road Show
2/26/2013

Fidelity® and Extend Health Partner to Help Retiring Employees Transition to Private Health Coverage
2/5/2013

Towers Watson Announces OneExchange, a Health Benefit Solution for Full- and Part-Time Employees, and Pre-65 and Medicare Retirees
1/31/2013

Towers Watson Announces Expansion of Exchange Solutions Segment
1/23/2013

Extend Health Wins Inc. Magazine Hire Power Award for Leading U.S. Job Creators
12/21/2012

Extend Health Survey: 74% of Seniors on Medicare Confident that Medicare Will Be There for Them for the Rest of Their Life
11/5/2012

Read the rest of this entry »

Extend Health held a tweet chat today on health care costs. There were some great questions and excellent answers from John Barkett, Dir. of Policy Affairs at ExtendHealth fielded questions. John worked in congress on health care and his wealth of knowledge was evident in the answers he provided.

If you missed our tweet chat you can read a complete recap of the event. Hope to see you at the next one!

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

Extend Health exhibited at the Garland Senior Fair in Texas this past Sat, Aug 4. There was a great turnout of over 350 people from the community and surrounding areas including seniors, their families, community leaders and service providers like us, who care about seniors and senior issues.

State Representative Angie Chen Button thanked Dwight and Ivory in person for exhibiting at the fair, fulfilling an invitation that she extended to Bryce Williams, Towers Watson Managing Director of Extend Health, at the ribbon-cutting of the first Extend Health service center in Richardson this past May.

Richardson Mayor Bob Townsend encouraged everyone to make good use of the resources available. And many other community leaders, including City of Rowlett Senior Advisory Board members Pamela Bell and Wayne Baxter, met with attendees and the community groups and companies exhibiting.

Dwight Turner and Ivory Rooks, both senior benefit advisors for Extend Health, who have years of experience helping seniors choose the best Medicare plans for them, served as Extend Health ambassadors. They answered people’s questions about Medicare and shared resources with them, explaining the role Extend Health can play in helping to connect people with the best coverage for their needs.

According to Dwight, “We put the care into shopping for Medicare!“

Ivory added, “It was great to be able to connect in person with people and extend a helping hand.”

Extend Health contributed a Texas-themed gift basket, which was raffled off to a lucky winner. The day was welcome chance to connect in person with many in a community that is very important to Extend Health.

We recently announced that Extend Health is bringing over 500 jobs to the community with the opening of its second service center in the Richardson Telecom Corridor.

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