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Understanding the Three Basic Types of Employee Benefits

Attracting and Retaining Excellent Employees: Benefits Turn the Key ! Mike Robinson Manager, Consultant Support Account Development Department Aflac Worldwide Headquarters. Understanding the Three Basic Types of Employee Benefits. No Choice - Mandated by Law. Employer Owned – Employee

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Understanding the Three Basic Types of Employee Benefits

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  1. Attracting and Retaining Excellent Employees: Benefits Turn the Key!Mike RobinsonManager, Consultant SupportAccount Development DepartmentAflac Worldwide Headquarters

  2. Understanding the Three Basic Types of Employee Benefits No Choice - Mandated by Law Employer Owned – Employee can choose to participate or not Total Choice- Employee chooses to participate and to what extent Aflac_BusinessMatchmaking_8/2/06

  3. Are Benefits Important?1 • Approximately 48% of small businesses offer health insurance to their employees.1 • 41% of firms with fewer than 10 employees offered health insurance. • 78% of those with 20 or more employees offered health insurance. • 1 National Compensation Survey, 2004 Aflac_BusinessMatchmaking_8/2/06

  4. Are Benefits Important? (continued) • Poll participants indicated three key reasons why they offered health insurance: • “It’s the right thing to do”. • “To attract and retain employees.” • The ability for the owner to get coverage through the business. Aflac_BusinessMatchmaking_8/2/06

  5. Major Reasons Employers Offer Health Insurance 2 • Responses from owners with 1-9 employees: • Helps employee recruitment 61% • Decreases turnover 47% • Increases employee productivity 43% • Employees expect or demand it 41% • 2 NFIB 2003 Business Poll on Compensating Employees Aflac_BusinessMatchmaking_8/2/06

  6. What Kind of Insurance is Offered?3 • Employee health insurance (61%) • Disability insurance (41%) • Life insurance (29%) • Dental insurance (24%) • 3 NFIB 2003 Business Poll on Compensating Employees Aflac_BusinessMatchmaking_8/2/06

  7. Group Health Insurance Options1) “Traditional Indemnity Plan” or “Fee-for-Service Plan” • No restrictions on providers. • Typically the most costly type of health insurance for the employer and employees. Aflac_BusinessMatchmaking_8/2/06

  8. Other Group Health Insurance Options: “Managed Care Plans” • HMO – Health Maintenance Organization • 3) PPO – Preferred Provider Organization • 4) POS – Point of Service Plan • 5) EPO – Exclusive Provider Organization Aflac_BusinessMatchmaking_8/2/06

  9. Group Disability Insurance • Short-term disability • Long-term disability Aflac_BusinessMatchmaking_8/2/06

  10. The Basics: Voluntary Insurance • Primarily sold at the worksite through payroll deduction. • Employees typically pay 100% of the premiums. • Gives employers an opportunity to round out a benefits package at little or no cost to them. Aflac_BusinessMatchmaking_8/2/06

  11. Voluntary Benefits can help with“out-of-pocket” claim costs: • Deductibles and co-payments. • Extra fees for employees who get treatments out-of-network. • Food, lodging, and travel to special treatment centers. • Loss of income. • Charges beyond “reasonable and customary”. Aflac_BusinessMatchmaking_8/2/06

  12. Why Employees Like Voluntary Benefits • Convenience of payroll deduction. • More choices and control. • Meet individual and family needs. • Guaranteed Renewable & Portable. • Comfortable with employer’s due • diligence; gives them feeling of security. Aflac_BusinessMatchmaking_8/2/06

  13. Most common types of Voluntary Insurance Products: • Supplemental Life • Disability • Accident (Expanded) • Cancer • Dental • Vision • Hospital Confinement • Long-Term Care Aflac_BusinessMatchmaking_8/2/06

  14. Think About It… • If you do not offer group health and voluntary insurance benefits, where will employees get the money for medical care, emergencies, and income replacement? • Savings? • A loan? • Family? • Employer (You)? Aflac_BusinessMatchmaking_8/2/06

  15. Selecting a Provider (Carrier):What Should I Ask? • What is the company’s financial strength? • A.M. Best and Standard & Poor’s Ratings • How is the company recognized? • Awards and industry recognition • How many times has the company changed rates on its policies? Aflac_BusinessMatchmaking_8/2/06

  16. Selecting a Provider (Carrier):What Should I Ask? (continued) • How quickly does the company pay claims? • How are claim funds distributed? • Does the company encourage preventive care? • What kind of service will we get? • What are the monthly, annual, and lifetime limits? Aflac_BusinessMatchmaking_8/2/06

  17. Selecting a Provider (Carrier):What Should I Ask? (continued) • Are policies portable? • Are policies guaranteed-renewable? • How far back does the company go when underwriting applications? • What is the definition of “disability”? • What is the benefits (loss) ratio? • What is the operating expense ratio? Aflac_BusinessMatchmaking_8/2/06

  18. The Right Formula for Employers • Start with the basics (core benefits). • Increase value without increasing your cost (voluntary benefits). • Help employees save tax money with flex plans, HSAs, and HDHPs. • Choose your providers (carriers) wisely. Aflac_BusinessMatchmaking_8/2/06

  19. Thank You Mike RobinsonManager, Consultant SupportAccount Development Department Aflac Worldwide Headquarters

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