BROKER WORLD MAGAZINE

JERAMY TIPTON is second vice president of marketing for Aflac, responsible for driving the companys success in large producer and key-account markets. He also leads Aflacs group marketing efforts. Tipton earned a bachelors degree in communications from the University of Oklahoma and has nearly 15 years of experience in sales and marketing. Before joining Aflac, he served as assistant vice president of marketing and communications at Allstate. Earlier in his career, he helped develop Jacksonville, Floridabased Netlook Inc., a start-up multimedia advertising and marketing company supporting large automotive groups. Tipton can be reached at Aflac, 1931 Wynnton Road, Colum bus, GA 31999. Telephone: 888-8610251.

Communicating The Real Costs Of Accidents And Illnesses

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any Americans believe they are invincible when it comes to accidents and illnesses. In reality, many workers will face costly health care needs and unexpected medical emergencies in their lifetime. Men and women of all ages, races and nationalities may be at risk at any given time for a sudden health emergency or other unplanned medical expenses. Yet many workers simply dont expect illness or injury and are unprepared. This leaves brokers with the challenge of adequately communicating the real costs of accidents and illnessfor both employees and employersto their clients. The Challenge According to the 2013 Aflac WorkForces Report (AWR), 48 percent of employees think its not very or not at all likely they or a family member will be diagnosed with a serious illness. In fact, the report revealed that only 5 percent of U.S. workers completely agree that their family would be financially prepared in the event of an unexpected emergency. Despite their denial surrounding the possibility of unexpected medical emergencies, these same workers admit they would be most worried about the resulting financial ramificationsa concern that is especially great among younger workers. According to the AWR, 70 percent of Generation Y employees agree they would be unable to adjust to the financial costs associated with a serious illness or injury. And nearly onethird of Generation Y workers (31 percent) have less than $500 right now to pay for out-of-pocket expenses associated with an unexpected illness or accident. The Facts The estimated out-of-pocket costs for a patient who suffers a heart attack range from $5,000 to more than $8,000 over the expected year of treatment, according to the American Cancer Society.1 In addition, strokes are among illnesses with the highest out-of-pocket costapproximately $23,380, according to the American Journal of Medicine.2 And someone who is diagnosed with coronary heart disease can expect to pay about $75,000 per year, according to a 2011 Milliman Research Report.3 When asked how they would pay for out-of-pocket expenses brought on by an unexpected illness, more than half (59 percent) of workers said they would have to tap into savings, 28 percent would use a credit card, and 24 percent (nearly one out of four people) would have to withdraw funds from their 401(k) plans to cover the costs, according to the AWR. The costs injuries and illnesses pose to employers are also very real. The Centers for Disease Control and Prevention states that the indirect productivity losses related to personal and family health problems cost U.S. employers $1,685 per employee per year, or $225.8 billion annually.4 Illustrating Risk Brokers can help consumers understand and prepare for the costs associated with
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Reprinted from BROKER WORLD June 2013 Used with permission from Insurance Publications

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common illnesses and injuries such as cancer, heart attack, fractured limbs and others, by using online resources such as the Aflac Real Cost Calculator, an online tool that incorporates data from numerous national public sources to show the average costs associated with a variety of common medical conditions. For example, a 35-year-old male can learn how a broken leg will impact his expenses. The calculator estimates that he is likely to pay $8,000 in medical expenses that arent covered by major medical insurance expenses such as deductibles, copayments and coinsurance, as well as medication and physical therapy costs.5 Based on his mortgage payment, household income and family structure information, hell see $2,258 in everyday living expenses and another $1,420 in additional out-of-pocket expenses. After all related expenses are tallied, this worker can see that the real cost of a broken leg is well over $11,000. Other consumers may be surprised to find that the average annual expense for people diagnosed with diabetes is $11,744, and that some of the newer cancer treatments can cost about $10,000 a month.5 Today more than ever, it is critical for Americans to be aware of all the options available to protect themselves from financial distress related to health care costs. As consultants, brokers can explain the real cost of accidents and illnesses to employers as a way to highlight the need for supplemental insurance, such as voluntary benefits, by emphasizing that the full range of expenses incurred can include anything from doctors visits, diagnostic tests and hospitalization to everyday living costs like transportation, groceries and childcare. The real cost calculator is an illustrative tool to help agents educate employers and their employees about the real costs of accidents and illnesses by bringing these realities into focus. With so many workers lacking a sufficient financial safety net, supplemental policies can provide a low-cost option that can help protect workers in the event of the unexpected. Often, having these policies can save individuals from debt and may even prevent bankruptcy, helping

care reform legislation to take effect in 2014, now is a good time for brokers to embrace new market opportunities
them focus on getting better and getting back to work. Communicating Solutions Beginning well in advance of open enrollment season, encourage employers to start communicating about the full scope and value of benefit offerings, employee assistance programs and wellness incentives, using multiple communication channels and materials that are easily understood by all employees. By ensuring that workers fully understand their insurance options, employers can help their work force save money by avoiding mistakes made during open enrollment. As the industry waits for the bulk of health care reform legislation to take effect in 2014, now is a good time for brokers to embrace new market opportunities and put their sales and prospecting efforts into overdrive. By supporting employers and equipping them with the tools they need to better educate their employees about available voluntary insurance benefits options, agents can ultimately help increase the employers bottom line. Many clients may be tempted to lower overhead costs by eliminating or reducing employees benefits coverage in response to health care reform changes. Brokers should encourage clients to consider a full range of creative benefit solutions, including voluntary insurance offerings, demonstrating value to clients by recommending the flexible coverage alternatives their employees want and need, without adding costs to clients operating budgets. Employers will also realize benefits through higher job satisfaction among employees who choose to enroll in voluntary benefits, as well as higher overall employee productivity. A robust benefits package is essential to attracting and retaining a talented work force. By clearly communicating the advantages of voluntary insurance options as critical components of more comprehensive benefits packages, employers and agents can help workers better understand how to financially protect themselves. For agents, these efforts will help contribute to vital business growth. Clear communication about the real costs of illness or injury and the true value of comprehensive benefits will empower employees with knowledge of how to financially protect themselves and improve employee loyalty in the process. Most importantly, voluntary plans offer peace of mind to the policyholder, which is priceless when facing a medical emergency.
Footnotes: 1. American Cancer Society Cancer Action Network (2009). New Study Reveals Popular Federal Employee Health Plan a Good Star ing Point to Determine Minimum Benefits Cover age (http://action.acscan.org/ site/News2?page=NewsArticle&id=11253&news_iv_ ctrl=1321). 2. Medical Bankruptcy in the U.S., 2007: Results of a National Study, Himmelstein, David U., Thorne, Deborah, Warren, Elizabeth, Woolhandler, Steffie, The American Journal of Medicine (www.pnhp.org/ new_bankruptcy_study/Bankruptcy-2009.pdf). 3. Benefit Designs for High Cost Medical Conditions, Milliman, 2011 (http://publications. milliman.com/research/health-rr/pdfs/benefit- designshigh-cost.pdf. 4. Comprehensive Workplace Health Programs to Address Physical Activity, Nutrition, and Tobacco Use in the Workplace, Centers for Disease Control, 2012 (www.cdc.gov/workplacehealthpromotion/nhwp/ index.html). 5. Aflac Real Cost Calculator (www.aflac.com/ realcost).

s the industry waits for the bulk of health

Reprinted from BROKER WORLD June 2013 Used with permission from Insurance Publications

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