Aon Hewitt (NYSE:AON) will be giving the idea of “defined contribution health coverage” a big, real-world test.
Aon Hewitt, the benefits consulting arm of Aon, has persuaded employers with more than 100,000 employees fixed amounts of cash and have the employees buy health coverage through a private exchange, or Web-based health insurance supermarket, this fall.
Aon Hewitt has been offering a similar menu of benefits options for about 20 million people, to workers and dependents at the employers that use Aon Hewitt to administer self-insured plans.
The difference between the self-insured plan program and the private exchange is that the private exchange will offer employers and their workers access to fully insured coverage, an Aon representative said in an e-mail interview.
The coverage will be true group coverage. The amount workers pay may be affected by where they live, what type of plan they buy, and whether they are buying single coverage or family coverage, but the insurers will not be able to reject workers with health problems, and rates will not be affected by the workers’ age or health status, the consumer rep said.
The Wall Street Journal has reported that Sears, a retailer with 90,000 employees, and Darden Restaurants, a company with 45,000 employees, are two of the companies that will be using the system.
Aon Hewitt will start by offering products from nine national and regional carriers through the exchange. The list of carriers includes units of UnitedHealth (NYSE:UNH), Cigna (NYSE:CI), and Health Care Service Corp., the privately held parent of Blue Cross and Blue Shield of Illinois.
Aon Hewitt will provide an “advocacy support team” to help explain the system to the employees and others who are shifting to the new system, the company.
Participating employees will get access to more choices of products and carriers, including dental and benefits options, than they would normally get through a conventional group health program, Aon Hewitt said.
Employer survey data show that about 40 percent of large employers expect to provide health benefits through exchanges in the next three to five years, the company said.
The Patient Protection and Affordable Care Act (PPACA) calls for states to use public exchanges to provide one-stop health coverage shopping for individuals and small employers starting in 2014.
Correction: An earlier version of this story described the Aon Hewitt exchange medical coverage incorrectly. The coverage to be sold through the exchange will be group coverage.
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