On Wednesday, the nation’s biggest chain of drugstores said it would require eligible employees to purchase health insurance through a private health care exchange starting next year.
Walgreen (WAG) will provide a defined contribution to pay for worker health insurance. The company said that employees will have a wider selection of coverage plans through an exchange operated by Aon Hewitt than they would get from its previous plans. A Walgreen executive said that knowledgeable consumers purchasing their own coverage was the “only way to drive down costs in the health care space,” the Associated Press notes.
The chain becomes another example of major U.S. corporations who are looking to migrate employees to private health insurance exchanges. Under defined contribution health insurance, employers offer workers a specified amount of money to fund insurance coverage, but allow them to choose their own plans through the exchanges.
Health care exchanges usually offer a vastly greater array of coverage options compared to traditional employer plans. However, obtaining the right coverage requires employs to examine each plan and properly determine their individual coverage requirements.
The private exchanges are similar to state health exchanges established by President Barack Obama’s Affordable Care Act. State health care exchanges mandated under the law will start operation in October. Some insurance companies have withdrawn from the exchanges in a number of states.
Shares of Walgreen rose slightly in Wednesday morning trading.