Online Insurance Exchange Helps Retirees Make Right ChoiceOnline Insurance Exchange Helps Retirees Make Right Choice

Slideshow: RFID In Healthcare

Healthcare reform will soon bring many changes and new offerings in the choices and configurations of healthcare coverage. Online insurance marketplaces are already helping to ease the selection process for some individuals while helping employers rein in costs.

Instead of providing increasingly expensive one-size-fits-all retirement health benefits that often miss the mark of individual retirees' needs, many companies are attempting to control costs by setting aside an annual allotment of money in health retirement accounts, or HRAs, for individuals and their spouses to put toward purchasing their own supplemental healthcare plans. Those coverage plans include supplemental insurance to cover healthcare services, drugs, or expenses not covered by the government's "original" Medicare program, for which individuals generally become eligible at age 65.

However, with thousands of Medicare supplemental coverage options offered by dozens of private insurers, the selection process can be exhaustingly confusing to seniors. That's where online insurance marketplaces are helping.

Among online insurance marketplaces is Extend Health, the country's largest Medicare supplemental insurance exchange, which is assisting dozens of big employers including Volkswagen Group of America, Ford, GM, Chrysler, Caterpillar, Avon, Lawrence Livermore Labs, Eastman Chemical, FedEx, as well as some unions and municipalities, to simplify the selection process for retirees in choosing their supplemental healthcare coverage.

Extend Health's exchange is powered by web-based decision support tools that allow individuals to compare their coverage choices, while helping employers streamline work and control costs involved with providing retirement benefits.

Extend Health offers about 3,500 plans from 55 insurance carriers. The thousands of different Medicare supplemental options offered by the dozens of private insurers, include drug plans, as well as so called Medigap policies to fill coverage "gaps" and Medicare Advantage plans, which also provide extra coverage and can involve preferred-provider organizations and health maintenance organizations.

Because the health needs of individuals can vary greatly, even from year to year, Extend Health's decision support software helps the retirees during open enrollment season to narrow down the selection of plans based on considerations such as the specific prescription drugs a patient takes, whether an individual has a chronic illness, the types of medical specialists the person needs to see, and whether an individual can afford to bear higher or lower co-pays.

Extend Health's tools help individuals evaluate and compare plans costs and benefits. For employers -- who are Extend's clients -- the exchange helps eliminate the need for benefit department personnel to navigate coverage offerings with their hundreds, or sometimes thousands, of retirees.

Slideshow: RFID In Healthcare

Also, by providing HRAs to retirees, employers can have better control over spending on retiree healthcare benefits, as the employer can set aside specific sums for the accounts, compared to the employer offering coverage plans from one or two carriers, whose annual costs can escalate unpredictably from year to year.

Extend Health officials say the company's exchange programs can help employers save about 30% on retiree health benefit costs. Last year, Volkswagen Group of America decided to begin offering its retirees HRAs in an attempt to help rein in costs.

By offering Volkswagen retirees a predetermined sum that they can spend on a health programs of their choosing and providing them with tools from Extend Health to pick those plans, Volkswagen can better control its spending on healthcare for retirees, compared with Volkswagen picking one insurance carrier to build a plan that's less flexible to individuals' needs and likely more costly, Leslie Melton, Volkswagen Group of America benefits advisor.

"We told the retirees, here's a bucket of money, pick a plan," that best suits their needs through Extend Health, Melton said.

Volkswagen provides retirees $2,625 (or $5,250 for a retiree and spouse) a year toward the HRAs benefits. "If they don't use it, they leave dollars on the table," Melton said.

At Volkswagen Group of America, Extend Health's services are offered to 1,230 of its eligible retirees, and since offering the program last year, it's being used by 1,041, to help pick the plans that best fit their or their spouses' individual needs. Via Extend Health, Volkswagen retirees have available to them 286 plans from 34 carriers.

Retirees -- or a designated helper, such as an adult child -- go on Extend Health's site to answer a web-based survey that helps the retiree drill down on the coverage plans that best fit the individual's health needs and budget, taking into consideration factors such as the list of the prescription drugs an individual takes, the type of doctors the patient needs to see, and the health providers they prefer going to. The system then displays a list of the three to six plans that best meet the individual's needs, and lists pricing and co-pays.

"The devil's in the details," said David Lash, Extend Health senior director of product development. "Sophisticated technology is hidden from the retirees," so that the site is easy to use.

Slideshow: RFID In Healthcare

Nonetheless, there's "a blending of technology and human interaction" offered by Extend Health to help seniors, many whom often prefer talking to a live person, said Bryce Williams, Extend Health CEO .

If the retirees choose, they can also connect by phone to Extend Health call center consultants -- who are trained subject experts in the various plans--for guidance in completing the health surveys and making their final choices about various options, said Lash.

The Extend Health call center consultants also use the decision support tools to assist retirees in narrowing down their best options. While Extend Health uses some off-the-shelf technology components in its environment, many of its applications are in-house developed, Lash said.

Retirees can link to the Extend Health website from their former employers' sites. Employers can also choose to send Extend Health data feeds containing retirees' identification and demographics data to pre-populate enrollment information, reducing errors that can happen when individuals enter information when enrolling in plans.

"When you turn 65 you can get supplemental plans" to provide coverage for healthcare services, treatments, drugs or expenses not covered by Medicare, but with hundreds of plans out there, navigating through all the offerings to make the right choice "isn't easy," said Barry Wood, the spouse of a Ford retiree who left the company three years ago.

"You can spend hours comparing the nuances" of the offerings, which often come in the form of unsolicited snail mailings from companies, he said.

But with Extend Health, Wood completed an online survey and set up a phone appointment with an Extend Health representative who explained the best options available to Wood based on his health needs and budget concerns.

Extend Health's services "took the fear out of making the wrong choice," he said.

"The exchange gives retirees more choices and better buys, and helps employers provide retiree plans in a new way," said Extend Health CEO Bryce Williams.

The company's "next frontier" is helping companies handle benefits for early retirees under the age of 65 who aren't yet eligible for Medicare benefits.

Beyond that, the company expects to work with states and other players as new insurance exchanges emerge related to healthcare reform, said Williams.