October 30, 2014 – Lincolnshire, IL – Aon Hewitt, the global talent, retirement and health solutions business of Aon plc, today announced The Aon Retiree Contingent HRA™, a new and innovative health reimbursement arrangement (HRA) strategy that better aligns employer and retiree cost-management objectives and encourages retirees to make efficient health plan choices in the individual market.
In general, most employers that move retirees to a private health exchange introduce an HRA to support the delivery of a tax-free reimbursement to pay for retirees’ premiums and/or out-of-pocket costs. Traditional HRA strategies allow employers to reduce cost to some extent while creating opportunities for most retirees to find equal or better coverage in the individual market. These approaches leverage a “one-size-fits-all” reimbursement strategy regardless of retirees’ individual health care needs or local market efficiencies. This generally results in overspending by the employer and inefficient health care selections by retirees.
The Aon Retiree Contingent HRA allows employers that are moving retirees to the Aon Retiree Health Exchange to structure the HRA reimbursement so that it aligns with actual retiree health care needs. It leverages the market-leading plan choice architecture and administrative capabilities of the Aon Retiree Health Exchange to deliver the tax-free reimbursement to retirees and market areas that need it the most, and away from more efficient market areas that can deliver greater value to retirees without significant employer funding. This creates a more efficient and cost-effective overall HRA strategy and eliminates much of the waste associated with traditional HRA approaches.
Click on the external link below to review the entire article: