Walgreens Shifts 180,000 Employees To Health Exchange

Walgreens (NYSE:WAG) will move its 180,000 employees to a private insurance exchange beginning in 2014, instead of offering a limited set of healthcare plans itself, the company said Wednesday (Sept. 18)

Under the new arrangement, Walgreens employees who previously had health insurance as a benefit will have to select from up to 25 health insurance plans offered by five carriers at a range of prices and coverage. Walgreens will provide a fixed subsidy, and employees will pay the difference in the cost of the plans they choose. The insurance exchange will be run by benefits consulting firm Aon Hewitt, which will provide similar services for Sears (NASDAQ:SHLD) and Darden (NYSE:DRI), the parent of Olive Garden and Red Lobster.

Exactly how many Walgreens employees will be in the new exchange isn't clear. Reuters reported that 120,000 have opted for coverage for themselves and 40,000 family members, while another 60,000, many of them part-time employees, weren't eligible for health insurance.

The Aon Hewitt exchange isn't part of the insurance exchange system mandated by the Affordable Care Act, but Walgreens is shifting its employees to it at the same time the ACA exchanges become active. Walgreens said that, aside from rising health-care costs, the switch will simplify compliance with the new law.

In Walgreens case, the five plans offered include two that are more expensive and two less expensive than Walgreens' previous plan. Aon Hewitt said about 42 percent of participants typically choose a plan less expensive than they used before and 26 percent choose a higher-cost plan, while 32 percent stay at the same level.

Among employers in general, 24 percent have said they were likely to shift health benefits to a private exchange over the next five years, according to a March survey by Towers Watson and the National Business Group on Health.

For more:

- See this Wall Street Journal story
- See this Reuters story

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