Retiree Health Benefits Program to Help Large Employers with Cost Challenges and Improve Retiree Access to Affordable Health Benefits

Aetna (NYSE:AET) today announced it has entered into a letter of intent with HR Policy Association (HR Policy) to offer a retiree benefits program which will include a first-of-its-kind national solution to help employers control their retiree medical costs and offer access to affordable retiree benefits. The program will offer a fully-insured, pre- and post-65 retiree medical solution. Under this arrangement, retirees of HR Policy member companies will have access to group retiree health insurance plan options through Aetna, regardless of retiree health status at the time of retirement. The offerings are being developed for the Association’s Retiree Health Access™ (RHA) program in response to growing concerns among large employers about the cost of health care for both pre-65 and post-65 retirees and the increasing challenges they face in offering these benefits to their retirees. HR Policy Association, a consortium of 250 employers — who collectively employ more than 12 million people in the United States and have an estimated retiree population of approximately 2.5 million — is working with Aetna and PricewaterhouseCoopers (PwC) to create the program. "As part of our larger imperative to improve access and expand coverage choices for all Americans, and particularly for those who have retired from active employment, Aetna is leading the marketplace in developing new retiree options for employers,” said Jim Foreman, executive vice president and head of Aetna’s National Businesses organization. "Employers are under significant pressure to control rising health care costs and are seeking solutions that make it possible to provide retiree benefits. Our goal is to offer options that allow more employers the ability to continue to offer retiree benefits and just as importantly provide a solution for employers who may not have previously provided retiree benefits.” The Centers for Medicare & Medicaid Services (CMS) estimates that health spending between 2006 and 2015 will grow at an average annual growth rate of almost 7.2 percent (2.3 percentage points faster than average annual GDP growth), with total health spending in that period of about $30.3 trillion. In response, a significant number of large employers in recent years have been forced to increase retiree contributions to premiums or have dropped their retiree benefits entirely. A recent survey found about 11 percent of large U.S. companies surveyed dropped health benefits for future retirees under age 65 in 2006; nine percent did the same for a group of future Medicare-eligible retirees and a nearly equal number are considering doing the same in 2007. According to a survey of HR Policy members, 85 percent of respondents said they would consider including their existing retirees in this solution as a measure to stem movement toward reduced access. "We’re pleased that Aetna shares our commitment to providing forward-looking, strategic retirement offerings and a willingness to develop innovative solutions to the problem of rising retiree health care costs,” explained Jeffrey C. McGuiness, President of HR Policy Association. "Our enhanced Retiree Health Access program is designed to make multiple options available at different levels of coverage and cost, and demonstrates how HR Policy, Aetna, and our partner organizations are seeking to address the health care challenges of large employers and their retirees.” This expansion of the Association’s Retiree Health Access program is being developed to offer comprehensive, fully-insured early and post-65 group coverage options available at retirement regardless of health status. The pre-65 benefit options will include up to four standard plan designs - two health savings account compatible designs, and two more traditional major medical coverage options that provide comprehensive catastrophic coverage. All of the plan designs will include features to help control costs, including incentives for using high performance networks and in-network providers. The plans will also include innovative medical management programs that actively manage chronic diseases, promote wellness and reduce the risk of avoidable health care problems. All of the plans will include preventive care coverage, including first-dollar coverage for preventive benefits received at in-network providers such as routine eye and hearing exams, adult physicals, routine digital rectal exams and Prostate-specific Antigen Testing (PSA), routine gynecological exams and routine mammograms, and colorectal cancer screenings. "Early retirees often suffer from one or more chronic health conditions, making benefits one of the most significant and costly challenges facing large employers,” said Foreman. "Leveraging our medical management experience with the Medicare retiree population, we are able to apply strategies that help mitigate costs while enhancing quality of life for these members with targeted case management, disease management and educational programs. When they are Medicare-eligible, these individuals will have the same support available to them with our post-65 solutions, establishing a health care continuum throughout their retiree years.” The post-65 group insurance options will include Medicare Advantage HMOs and Medicare Part D prescription drug coverage. As part of the RHA program, Aetna's new Medicare Advantage Private Fee-For-Service (PFFS) plans also will be offered as an alternative for employer groups in all fifty states. Currently, HR Policy, Aetna, and their partners are in the process of finalizing program terms and selecting administrators for the program. HR Policy will formally present the program to its membership on March 23. About HR Policy Association HR Policy Association, established in 1957, consists of chief human resource officers representing more than 250 of the largest corporations in the United States. From nearly every major industry sector, HR Policy members have a combined market capitalization of more than $8.2 trillion and employ more than 18 million employees worldwide. Due to extreme concern over skyrocketing health care costs in the United States and deficiencies in efficiency and quality, the Association has been working through its public policy agenda and market reform initiatives to address the problems that plague our nation’s health care system. About Aetna Aetna is one of the nation’s leading diversified health care benefits companies, serving approximately 29.8 million people with information and resources to help them make better informed decisions about their health care. Aetna offers a broad range of traditional and consumer-directed health insurance products and related services, including medical, pharmacy, dental, behavioral health, group life and disability plans, and medical management capabilities. Our customers include employer groups, individuals, college students, part-time and hourly workers, health plans and government-sponsored plans. www.aetna.com