Many Educators Delaying Retirement Due to Concerns about Health Care Coverage

BOSTON, May 24, 2005 - In response to growing concerns among higher education professionals about access to and the costs of retiree health care, Emeriti Retirement Health Solutions has strategically aligned with Fidelity Investments and Aetna to introduce the Emeriti^® Program. The Program is a first-of-itskind solution for higher education faculty and staff, combining tax-advantaged investment vehicles with access to group retiree health insurance plan options that integrate with Medicare. Emeriti Retirement Health Solutions, a consortium of colleges, universities and other higher education-related tax-exempt organizations, created and oversees the program.

The Emeriti Program takes a defined contribution approach to pre-funding health care costs associated with retirement. The Program uses employer- and employee-funded trusts called Voluntary Employees' Beneficiary Associations (VEBAs) as the investment vehicles, which are funded over the course of employment. Contributions made by higher education institutions are not taxable to employees and contributions made by employees are after-tax. These contributions are invested in a set of mutual funds managed by Fidelity Investments at the direction of the employee participating in the Program. Program assets grow tax free until the date of retirement, when they can be used on a tax-free basis to pay for qualified medical expenses, including Medicare supplemental insurance premiums after age 65. Upon retirement at or after age 65, individuals sign up for Medicare Parts A and B and can choose among three health plan options offered through the Emeriti Program that complement Medicare coverage. After satisfying retirement eligibility requirements for their institution, individuals also can receive reimbursement for other qualified medical expenses (e.g., out-of-pocket costs not covered by Medicare or supplemental insurance) from their accounts.

"This program was designed to address findings of a three-year study where we interviewed a broad range of tenured faculty¹ and found the majority expressed concern, anxiety and frustration about the cost of, and access to, retirement medical insurance," said Dr. Linda Evers Cool, founding director of New York-based Emeriti Retirement Health Solutions.

"In fact, many tenured faculty are delaying retirement due to these concerns," continued Cool. "Our research showed that individuals at institutions with substantial commitments to post-retirement health insurance retired on average 18 to 36 months earlier than peers at institutions with no such health benefit."

The Emeriti Program can help institutions support more timely retirements by giving retiring faculty and staff access to group health plan options that provide coverage beyond what is offered by traditional Medicare, such as out-of-pocket maximum protection in cases of prolonged, catastrophic illness and enhanced prescription drug benefits. The Program seeks to provide retirees with flexibility and choice, offering them portable benefits that allow access to care anywhere in the United States, short-term coverage while traveling abroad, and a range of health plan options at annual enrollment.

With health care costs continuing to rise and large numbers of faculty and staff approaching retirement age, higher education institutions worry about the affordability of providing retiree health benefits for their employees, as well as the risks of not offering these benefits at all. By pre-funding retiree health care costs annually through the Emeriti Program, institutions can gain more fiscal control since they are contributing today's dollars toward meeting the future needs of their retirees. Pre-funding these costs can significantly reduce long-term accounting liabilities associated with more traditional funding models.

"In addition to allowing senior faculty and staff to retire earlier and with a greater sense of health care security, our institutions benefit from the financial predictability of the Emeriti Program's defined contribution approach, which allows them to determine in advance the amount they will contribute annually to each employee's health benefits," explained Dr. Kenneth Cool, president of Emeriti Retirement Health Solutions.

"Beyond the benefit of this funding model, we believe that administrators will see significant value in outsourcing their retiree medical benefits administration and the comprehensive approach to participant educational services that spans throughout an educator's career into retirement," added Cool.

Fidelity Investments provides a menu of mutual fund investment options for the Emeriti Program, as well as extensive recordkeeping functions. In addition, Fidelity manages disbursements during retirement for health insurance premiums and other qualified out-of-pocket medical expenses.

"The Emeriti Program is a strong offering for higher education institutions and their faculty and staff who need a comprehensive medical benefit plan for their life after work," said Cynthia Egan, executive vice president, Fidelity Investments Tax-Exempt Services Company. "We believe that our workplace retirement plan expertise will help make this program attractive and successful for colleges, universities, and other higher education-related tax-exempt organizations that wish to implement this type of offering for their communities."

Aetna provides Medicare-eligible participants in the Emeriti Program with a choice of three indemnity-type health benefit plan options that complement traditional Medicare. Options I and II integrate with Medicare fee-for-service, which allows beneficiaries to see the physician or health care professional of their choice, but provides coverage for medical expenses not covered by traditional Medicare, such as those incurred during foreign travel. The plans provide portability across state lines and include enhanced prescription drug benefits and coverage for preventative care. They are priced at different premium levels so employees can select the plan option that best fits their needs. Option III offers prescription drug coverage only. All three plans provide coverage to retired employees anywhere in the United States and its territories.

"The key to health and financial security in retirement is knowledge and advance planning," said James Foreman, Aetna's senior vice president for National Accounts. "Emeriti Program participants will benefit from saving for retirement health care expenses over the course of their careers, as well as access to Aetna's affordable health plans. In addition, Aetna's online information tools on health care costs and quality will help program participants make educated decisions about their health care spending in retirement."

About Emeriti

Emeriti is a consortium of, by, and for colleges, universities, and other higher education-related tax-exempt organizations. Through its participating members, the consortium leverages collective buying power, shared resources, and economies of scale to secure well-designed, competitive benefits and deliver them in a cost-effective manner. The development of the Emeriti Program was made possible by a series of generous grants from the Andrew W. Mellon Foundation. To date, 29 private colleges, universities and higher education-related tax-exempt organizations have joined the Emeriti Program, and more than 200 additional organizations are currently pursuing membership. For additional information about the Emeriti Program, visit www.emeritihealth.org. (The full name of Emeriti Retirement Health Solutions is The Emeriti Consortium for Retirement Health Solutions, an Illinois not-for-profit corporation.)

About Fidelity Investments

Fidelity Investments is one of the world's largest providers of financial services, with custodied assets of $2.1 trillion, including managed assets of $1.1 trillion as of April 30, 2005. Fidelity offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services to 19 million individuals and institutions as well as through 5,500 financial intermediary firms. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, one of the largest mutual fund supermarkets and a leading online brokerage firm. For more information about Fidelity Investments, visit www.Fidelity.com.

About Aetna Inc. (NYSE: AET)

As one of the nation's leading providers of health care, dental, pharmacy, group life, disability and long-term care benefits, Aetna puts information and helpful resources to work for its approximately 14.4 million medical members, 12.8 million dental members, 9.0 million pharmacy members and 14.0 million group insurance members to help them make better informed decisions about their health care and protect their finances against health-related risks. In addition to its indemnity offerings to Emeriti participants, Aetna provides easy access to cost-effective health care through a nationwide network of more than 672,000 health care professionals, including over 400,000 primary care and specialist doctors and 4,084 hospitals. For more information, please visit www.aetna.com. (Figures as of March 31, 2005)

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Emeriti Retirement Health Solutions, Aetna, and Fidelity Investments are independent organizations and are not legally affiliated.

Fidelity Investments Tax-Exempt Services Company is a division of
Fidelity Investments Institutional Services Company, Inc., 82 Devonshire Street, Boston, MA 02109

¹ The research, funded by The Andrew W. Mellon Foundation, consisted of surveys completed by 720 active and retired faculty members at 47 private liberal arts colleges and universities throughout the U.S. and follow-up interviews with a subset of 231 of those individuals. Surveys and interviews were conducted during the 1999-2000 academic year.