Walgreen’s (NYSE: WAG) announced plans on Wednesday to move its workers to a private health insurance exchange, adding to the trend of corporations offering cash to workers to purchase their own plans on exchanges.
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The notice comes less than two weeks ahead the Affordable Care Act’s exchange open enrollment start on Oct.1, and follows similar moves from Sears-Holding (NASDAQ: SHLD) and Darden Restaurants Inc. (NYSE:DRI).
The move to a private health insurance exchange from coverage provided directly from a company is significant, with a reported 160,000 workers who will be eligible for coverage.
While private health-exchanges are entirely separate from the ACA’s exchanges, Walgreen’s spokesman Michael Polzin says the drugstore chain decided to offer this coverage to 160,000 workers in order to keep them off government exchanges and provide them with broader coverage options.
Polzin says while 160,000 of its 240,000 employees across the country will be eligible for coverage, with dependents of workers’ families on the exchange, a total of 180,000 are expected to enroll.
“We are currently only offering employees two high-deductible plans, and this was an opportunity for us to broaden the options for coverage,” he says. “Our exchange is a completely separate thing from the state-run exchanges for individuals. This is a corporate private exchange.”
Sears and Darden Restaurants plan to run their own private exchanges for employees ahead of Obamacare, and media giant Time Warner (NYSE:TWX) and IBM (NYSE:IBM) also recently announced plans to move retirees onto such benefit exchanges, and may move full-time workers to these plans in the future.
Private exchanges are still a minority in the marketplace. But new research shows that by 2017, private exchange participation will approach public exchange enrollment levels. Global management consulting firm Accenture predicts projects nearly 18% of the American public will purchase insurance through these employer and insurance-run marketplaces now, and that one in four employers are expressing interest in these exchanges.
Walgreen’s private exchange will be run by Aon Hewitt, and will include offerings from major insurance companies including United HealthCare (NYSE:UNH), Kaiser and Anthem. Walgreen’s declined to comment on how much cash it would be giving to employees to shop in its exchange.
“We don’t want to send our employees to the state or government exchanges—we want to continue providing health-care benefits to our employees, and this was a way to continue doing that,” Polzin says. “We can provide them options, and continue providing wellness programs like we do today, such as getting paid for healthy behaviors, and having 100% of preventive health-care services covered.”