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3 things Aflac is saying about PPACA strategy

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Aflac Inc. (NYSE:AFL) is experimenting with using its own private exchange program, the Everwell system, to increase the productivity of career agents in the United States.

Executives from Aflac, a company famous for its spokesduck, talked about the Everwell program last week with securities, during a conference call the company held to discuss its outlook for 2016.

The company has an unusual perspective on the U.S. health insurance market.

The company is best known in the United States for selling individual supplemental health insurance products at the worksite. 

In Japan, the company has had a major cancer insurance operation for decades, and it’s also built a big business selling products designed to help consumers handle the gaps in that country’s government-paid national health coverage.

Aflac executives experience in Japan may have given the company good preparation for operating in a U.S. health insurance market reshaped by the Patient Protection and Affordable Care Act of 2010 (PPACA).

See also: Voluntary benefits players enter PPACA World car wash

Aflac is also a big, successful, publicly traded company that is keenly interested in the commercial major medical insurance market, but is not dependent on sales of major medical coverage.

For a look at three things Aflac’s executives told the analysts about the company’s place in PPACA World, read on.

Piggy bank in a vise

1. The company sees major medical out-of-pocket costs increasing and the demands on employers’ human resources team growing.

Teresa White, president of Aflac U.S., said the company sees pressure to offer high-deductible coverage having more of an effect on the smaller employers, and the administrative concerns related to employee counting having more of an effect on larger small employers.

“Mid to large employers are still overwhelmed by the regulatory aspects,” White said. “These employers are seeking ways to make coverage affordable, while at the same time reducing the administrative burden.”

Meanwhile, Aflac research has shown that 52 percent of U.S. workers would have a hard time handling even $1,000 in out-of-pocket medical costs, White said.

“This dynamic has caused many brokers to look to voluntary to help clients fill in gaps,” White said.

See also: 3 top industry targets for non-medical benefits

Big dog with a small dog

2. The company wants to coordinate the activity of its two big U.S. distribution channels.

Aflac has been trying to prevent conflicts between its career agents and the agents affiliated with outside brokers by giving each channel its own job.

Aflac has been asking the career agents to focus on employers with fewer than 50 employees, and the brokers to go after bigger employers.

See also: Top 5 broker concerns 

Pigeons eating

3. The company sees running a private exchange as a good well to help the career agents offer small groups better plan menus.

Aflac is trying to build deeper relationships with the broker partners and offer them better support tools, such as new proposal management tools and better underwriting systems, White said.

Aflac is trying to help the career agents open smaller employers’ doors by outfitting them with the Everwell private exchange system. The company began testing the system in Georgia, Illinois and Texas in 2014 and now offers access to “Everwell certified” agents in many more markets.

White said a typical Everwell exchange program might offer a high-deductible plan alongside a traditional major medical plan and five voluntary benefits programs.

“It gives the small case market something that they have not had, which is a chance to shop for their coverage on one exchange that lets them see voluntary and major medical,” White said.

During the 2014 pilot program, presenting the voluntary products that way helped increase voluntary product sales about 40 percent, White said.

See also: Employers report growing exchange use


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