With medical expenses among the most pressing financial concerns of retirees, Fidelity will team up with Extend Health, a Towers Watson company, to help retiring corporate employees choose Medicare coverage.
Once people reach age 65 and become eligible for Medicare, they face myriad choices with substantial financial consequences. Original Medicare, which can be supplemented by a private Medigap policy, appears to be losing ground to private Medicare Advantage plans. Reports indicate that nearly 1.5 million seniors joined a Medicare Advantage plan for 2013, bringing total enrollment to 14.5 million, almost one-third of all Medicare beneficiaries. In addition to choosing among Medigap policies and Medicare Advantage plans, many Medicare enrollees select private Medicare Part D coverage for prescription drugs.
According to Fidelity, more than 7,500 Americans turn 65 every day and thus have to decide among the available options. To deliver guidance, Fidelity has entered into a strategic agreement with Extend Health, a private Medicare exchange that says it has provided enrollment assistance to more than 300,000 retirees. Consulting firm Towers Watson purchased Extend Health in 2012.
Under the new agreement, Fidelity and Extend Health will provide retiring participants who are coming off company-sponsored health plan coverage with access to resources and support to help them get quality coverage at an affordable price. The two companies will also assist plan sponsors communicate changes and help retirees select a private insurance option that best suits their needs. Fidelity will begin offering the service to its plan sponsor clients during the third quarter of 2013, in time for this years benefits enrollment season, which typically begins in the fall.
With health care being one of the most underestimated costs in retirement and Medicare not covering all medical expenses, an increasing number of employers are asking for help in transitioning their employees into retirement, Christi Rager Wise, a senior vice president with Fidelity, said in a statement. Our agreement with Extend Health will expand the financial guidance Fidelity provides employees transitioning into retirement while helping them tackle one of the biggest risks to financial security in retirement, the cost of health care.
Bryce Williams, Towers Watsons managing director of exchange solutions, stated that the combined expertise of Extend Health and Fidelity will help retiring employees by providing clear choices in their health coverage options. Those individuals will have access to the Extend Health exchange, where national and regional health insurers offer multiple plans. Choices provided to participants will be based on factors such as participants desired level of coverage, medical needs, financial situation, and geographic availability.