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UPS' switch to a private health insurance exchange provides more options

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United Parcel Service Inc. and about 8,000 of its age-65-and-older Medicare-eligible non-union retirees are reaping the benefits of the Atlanta-based package delivery company moving health care coverage to a private insurance exchange.

For years, UPS offered a single self-insured health plan to Medicare-eligible retirees.

“There was no choice. It was one size fits all,” said Al Rapp, corporate health care manager at UPS. “We didn't think it was a great value” in many cases for retirees.

In 2011, UPS decided on another approach. It contracted, effective Jan. 1, 2012, with Aon Hewitt to offer coverage to the retirees through an insurance exchange — Aon Hewitt Navigators.

Now, the retirees, depending on where they reside, can have nearly three dozen plans from which to choose to find one that best fits their health care needs.

“We knew that providing choices would be a lot better than what retirees had before,” Mr. Rapp said.

The retirees apply UPS contributions toward the premium charged by the plans. If the UPS contribution is more than the premium charged by the plan, retirees then can apply the difference to pay for out-of-pocket expenses, such as costs that fall under a plan's deductible.

To prevent confusion, the exchange provides benefit advisers to help the retirees evaluate and select an appropriate health plan.

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“The retirees quickly saw the value of the benefit advisers and became very positive about the change,” Mr. Rapp said.

Retirees also can turn to exchange staff throughout the year for assistance with numerous issues, such as questions about a claim. As a result, UPS no longer has to devote corporate resources to administer the retiree program.

“That allows us to concentrate on meeting the many other needs of our people,” Mr. Rapp said.

Moving to a private health insurance exchange was not a cost issue as the company's retiree health care plan contribution formula has not changed.

“It was a choice issue. We knew the plan choices would be better than what retirees had before,” Mr. Rapp said.