How can I use mail merge and retain the formatting?

I have a Word document that has different fonts, Bold, Underline etc.  Upon
merging all of the fields become properly populated and look exactly as they
should while still in Word, however, once I select "Merge to e-mail" there
are only 3 options for Mail Format: Attachment, Plain Text and HTML.

HTML does nothing as far as I an tell.
Attachment sends the Word document from Outlook as a perfectly formatted
attachment (not what I want).
Plain text merges the letter into the body of the e-mail but without any
formatting.

I'd like the e-mail merged into the body of the e-mail with formatting.
Also of note is that my signature in Outlook is not included with the
e-mail, but I'd like it to be.

Any suggestions?

Thanks!