Mercer, Extend Health deal aims to help employers manage retiree health benefits

Medicare exchange operator Extend Health and global benefits consulting firm Mercer have announced a referral agreement aimed at helping employers design and manage the costs for benefits provided to Medicare-eligible retirees.

“Many large employers prefer to continue providing medical benefits for Medicare-eligible retirees by giving retirees a subsidy to help pay for individual coverage,” said David P. Rahill, U.S. region leader for Mercer Health and Benefits business in a press relase announcing the deal. “For these employers, the Extend Health exchange solution offers an easy, effective and proven way to transition their Medicare-eligible retirees to the individual market.”

According to Mercer’s 2010 National Survey of Employer-Sponsored Health Plans, employers have continued to drop health benefits for their Medicare-eligible reitrees due to increasing costs. Many large employers, however, continue to offer the benefit, the Mercer survey noted, with 38 percent offering coverage for retirees 65 and older.

The deal between Mercer and Extend Health aims to lessen the administrative burden on employers looking to offer retiree health benefits, while also allowing them to shop on the country’s largest Medicare benefits exchange. The companies will provide a service to employers that will manage retiree communication at the time of the transition to Medicare as well as annually for renewals during the Medicare annual enrollment period, and provide ongoing customer service and advocacy with health insurance carriers.

Further, by using Extend Health’s Medicare insurance exchange, the largest such exchange in the country, retirees can find Medicare Advantage plans serving their area and comparison shop to get the best deals based on their individual health needs.

“Purchasing individual plans on a health insurance exchange empowers retirees with more choice and personalization in health plans. At the same time, employers can better manage costs and cap future liabilities,” Rahill added.

Mercer will also provide consulting expertise to employers in the early part of the transition as they evaluate the move to a defined-contribution model, educating them on the actuarial and legal considerations and working through the design of retiree subsidies. These calculations can be complex, especially for large employers that have a number of retiree populations that are already part of different benefit programs.

“We believe employers nationwide will embrace the combination of Mercer’s deep knowledge and experience in retiree health care consulting along with access to Extend Health’s proven, powerful and scalable exchange solution,” said Bryce Williams, CEO of Extend Health in a prepared statement announcing the deal.