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Early Retiree Group Healthcare Coverage Challenges and Issues Bill Derech Aetna

2. Agenda. IntroductionEmployee NeedsEmployer NeedsHow Can Group Coverage Meet These Needs?Thoughts for the Future. 3. Influences on Employee Retirement Decisions. . Marital statusPresence of childrenAge GenderEmployment statusRace and ethnicity. HealthyPotential for chronic conditionsEx

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Early Retiree Group Healthcare Coverage Challenges and Issues Bill Derech Aetna

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    1. Early Retiree Group Healthcare Coverage Challenges and Issues Bill Derech Aetna

    2. 2 Agenda Introduction Employee Needs Employer Needs How Can Group Coverage Meet These Needs? Thoughts for the Future

    3. 3 Influences on Employee Retirement Decisions

    4. 4 Early Retiree Group Healthcare Costs Double Digit Trend Lower Employer Subsidies Leveraging Impact to Retirees

    5. 5 Group Covered Members Becoming Uninsured Upon Early Retirement

    6. 6 To Offer or Not Offer Early Retiree Medical Coverage Why Offer? Attract Mid-Career Employees Bridge Retirement for Older Employees Why Not Offer? Cost Cost Cost

    7. 7 Plan Sponsors Healthcare Cost for Aging Members

    8. 8 What is the Market Demanding? Guaranteed Issue, plus Retiree Pay All, plus Decreasing Involvement From Employer

    9. 9 Risks in Providing Group Early Retiree Coverage Guaranteed Issue, plus Retiree Pay All, plus Decreasing Involvement From Employer = Potential Antiselection Created From Individually Underwritten Market

    10. 10 Individual vs Group Risk Pools

    11. 11 Key Differences Between Group vs. Individual Market: Case Study (figures are estimated, assume 61 year old member)

    12. 12 Analysis Tool for Group Risk

    13. 13 Estimated Impact of Selection on Claims Per Member Per Month

    14. 14 What Does This Analysis Tell Us? How much does the employer need to contribute to neutralize carrier risk? Highlights the value of individual underwriting Gives options to the employer May quantify necessary RRA/HRA funds needed to maintain availability of group coverage (lump sum, or per year) Employers may start planning today for future early retiree coverage Transfer implicit subsidy to early retirees in form of a contribution

    15. 15 Thoughts for the Future Bundle with post-65 retirees? HSA/RRA funding vehicles to guarantee early retiree coverage? Limited benefit plans? HSA with funds redirected from a 401(k)?

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