Health insurance exchanges are in the spotlight as the Supreme Court reviews Barack Obama's signature healthcare law, whose provisions include the operation of subsidized, state-regulated health insurance markets in 2014.

By running a private Medicare exchange since 2006, through which consumers compare plans from different carriers side by side, Extend Health claims to have already helped over 130 companies, including Ford Motor Co (F.N), General Motors Co (GM.N) and Caterpillar Inc (CAT.N), save as much as $400 million annually in retiree health insurance costs.

Towers Watson said on Sunday it would pay $435 million, less net debt and certain transaction costs, for Extend Health and that it anticipated the acquisition to be dilutive to adjusted earnings per share by 2 percent or less in year one and then slightly accretive in year two.

"This is an important time for retiree health benefits. Both companies have a strong track record of helping employers develop strategies and create programs for employee and retiree benefits," Bryce Williams, CEO of Extend Health, said in a statement.

Under the deal, Williams is to lead a new business segment within Towers Watson dubbed "Exchange Solutions" that will inherit Extend Health's more than 30 Fortune 500 employers and over 200,000 retirees.

The transaction is subject to customary closing conditions, including clearance under the Hart-Scott-Rodino Antitrust Improvements Act, and is expected to close in less than 60 days, Towers Watson said.

A Towers Watson study last year found that 54 percent of employers were either somewhat or very likely to reconsider their current employer-sponsored plan strategy for post-65 retirees by 2015 as costs increased.

Bank of America Merrill Lynch (BAC.N) and Wickersham & Taft advised Towers Watson, while Morgan Stanley (MS.N) and Wilson Sonsini Goodrich & Rosati advised Extend Health on the deal.

(Reporting by Greg Roumeliotis in New York; Editing by Diane Craft)

• A Permanent Economic Emergency