As active employees move into a retiree population, health care decision-making also changes. Some companies provide a subsidy to the retiree population for purchasing health care on their own, but the tracking of that subsidy and the associated premiums create stress on an already overworked HR department.

For years, SelectQuote Senior’s retiree product has put the administrative load — particularly when an employer provided a subsidy to the retiree — on the employer.

Now, the Tampa, Fla.-based company is partnering with Acclaris, which provides services and technology to deliver health care and reimbursement accounts, to bring defined contribution packages to retirees. The companies will now fully administer the benefits from the moment the employee leaves the active workforce. Acclaris will manage the claims processing, subsidy and more details that the employer previously managed, through private-label software. In a joint statement, the companies say the partnership will provide “flexibility and control over health insurance coverage in a user-friendly interface specifically built for retirees.”

The right plan

Meanwhile, Acclaris’ Chief Revenue Office Seth Ravine says while an exchange platform provides a “guardrail,” participants still need to be equipped to make the right decisions each time they re-enroll. It’s a different consumer experience from being an active employee and they are not educated on how to buy. “There is too much selection and too many options,” he explains.

Under a typical retiree defined-contribution plan with a subsidy, the employer allocates an annual dollar amount for each plan participant. This amount is typically based on years of service at retirement. For example, at $100 per year of service, a retiree with 25 years of service at retirement is provided with $2,500 per year to use to purchase health insurance in the individual market.

But employers are now looking to limit the liability of the money they provide, says Katy Jennings, SelectQuote Benefit Solution’s senior vice president of business development. By moving to an exchange where individual coverage can be purchased instead of buying through a group plan, it presents savings for both sides, she says. Due to the older age of retirees, an individual plan purchased through an exchange is on average is cheaper than group rates, she says. While not all employers provide a subsidy to their retirees, some view it as a rite of passage, she adds.

What brokers and consultants have to bring and what retirees clamor for is the right plan that meets all participant benefit needs at the right price point, Ravine explains. Adds Acclaris CEO Dean Mason in a statement, “employers are looking for ways to manage the cost of providing retiree health coverage, and the retiree community needs solutions that are easy to understand and manage to ensure they get the full value of their benefits packages.”

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