In an exchange model, some employers may give retirees a fixed dollar contribution, with retirees applying that contribution toward the premium charged by the plan provider. If the premium is less than the employer contribution, for example, the retiree could apply the difference to pay for out-of-pocket expenses, such as costs that fall under a plan's deductible.
In other cases, the employer makes the exchange available to retirees but does not contribute towards the premium.
Retirees can gain access to a wider choice of plans in an exchange compared with an employer directly offering the coverage, said John Grosso, a senior vice president in Norwalk, Conn., with Aon Hewitt's health and benefits practice.
For example, an Aon Hewitt retiree exchange — known as Aon Hewitt Navigators — provides access to plans offered by up to 80 different insurers.