Towers Watson Launches Service for Employers That Subsidize Early Retiree Health Benefits
October 07 2014 - 8:05AM
Business Wire
Towers Watson’s OneExchange helps early retirees
choose between employer subsidy and federal tax credit
Global professional services company Towers Watson (NYSE,
NASDAQ:TW) today announced a personalized decision support service
that will help early retirees determine whether they are better off
using a subsidy from their former employer or taking a tax credit
from the federal government. Employer clients of Towers Watson’s
OneExchange asked for this capability in order to facilitate moving
their early (pre-Medicare) retiree populations to individual market
plans.
The service is designed to help early retirees optimize their
health insurance spending without “double dipping.” Under the
Patient Protection and Affordable Care Act, pre-Medicare retirees
can use either a tax-advantaged employer subsidy or a federal tax
credit to defray the cost of their health insurance premiums — but
not both.
The decision support service will be available to early retirees
whose former employers have chosen Towers Watson’s OneExchange to
assist them in selecting individual health plans. For employers
offering a subsidy, Towers Watson will set up and manage health
reimbursement arrangements (HRAs) for each early retiree. Sixty
percent of employers transitioning their early retirees to the
individual market using OneExchange this fall will offer subsidies
through HRAs.
“Early retirees who qualify for both a tax credit and employer
funding have a complex decision to make, with serious financial and
tax consequences,” said John Barkett, director of health policy
affairs with Towers Watson Exchange Solutions. “The OneExchange
decision support service is designed to provide them with the
information they need up front to lower their health insurance
costs without creating tax problems for themselves in the
future.”
Added Barkett, “And for the first time, employers can provide
funding to their early retirees through an HRA that OneExchange
administers — a valued service they’ve been able to provide to
their Medicare-eligible retirees for over nine years.”
Benefit Advisors Guide Early Retirees Through the Decision
Support Process
Using the decision support service is a simple three-step
process for early retirees:
1.
Estimate tax credit eligibility.
Early retirees answer questions about household size, location and
financial circumstances to estimate their eligibility for federal
premium tax credits and cost-sharing reductions available through
public health insurance marketplaces.
2.
Compare tax credit to employer
subsidy. Early retirees compare their estimated tax credit to
their employer subsidy, using a guided process that compares
subsidy amounts, qualification requirements, eligible expenses and
tax implications.
3.
Choose the optimal subsidy. Armed
with accurate information about their options, early retirees can
choose which subsidy to pursue. OneExchange can also help early
retirees who opt out of their employer subsidy to apply for tax
credits through the federal- and state-based health insurance
marketplaces, if they are eligible.
This decision support service is available by phone through a
OneExchange benefit advisor or online through a guided self-service
tool.
For early retirees who don’t qualify for federal subsidies, the
decision is simple. For those who qualify for both, the decision is
more complex than simply choosing the larger amount, making the
expert help offered by OneExchange a key part of the process.
For example, the employer funding amount may be greater than the
individual tax credit, but if the early retiree is buying insurance
for his or her whole family, the family tax credit may actually
lower costs more.
Another example: If the employer funding amount and tax credit
are about the same, the early retiree may want to choose the
employer funding, which is more flexible than the tax credit, and
comes with much less paperwork and fewer tax implications. It’s
also possible that if an early retiree underestimates household
income, he or she could end up having to pay back some of the tax
credit amount to the government.
Purchasing Individual Health Plans Through
OneExchange
OneExchange benefit advisors help early retirees compare, select
and enroll in individual market plans that are compatible with
their chosen subsidy. Early retirees who accept their employers’
funding can purchase individual health plans directly from insurers
in their area or from the public insurance marketplace. Early
retirees who accept a tax credit must choose plans from the public
marketplace in order to receive the credit.
The OneExchange subsidy decision support service will be
available during this fall’s annual open enrollment period for
plans providing health care coverage for 2015.
About Towers Watson
Towers Watson (NYSE, NASDAQ:TW) is a leading global professional
services company that helps organizations improve performance
through effective people, risk and financial management. The
company offers consulting, technology and solutions in the areas of
benefits, talent management, rewards, and risk and capital
management. Towers Watson has more than 14,000 associates around
the world and is located on the web at towerswatson.com.
Towers WatsonMediaRob Wyse,
212-920-1470rob@capital-content.comorMelanie Meharchand,
650-292-8717melanie.meharchand@towerswatson.com
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