Benefit trends and innovation

About the Aflac WorkForces Report • Eighth annual study

– Results from more than 38,000 employees and 14,000 employers across eight years years

– Samples varying industries, company sizes, geography and demographics

• Third-party research to gain an understanding of benefits trends and challenges

* EE: 2011=3,035, 2012=6,151, 2013=5,299, 2014=5,209, 2015=5,377, 2016=5,000, 2017=5,000, TOTAL=35,071* ER: 2011=2,117, 2012=1,847, 2013=1,884, 2014=1,856, 2015=1,977, 2016=1,500, 2017=1,800, TOTAL=12,981

Employer Survey Results | Key Findings2018

.

Employer Results – Four Areas of Focus

Companies continue to be in an optimistic growth mode, even as concerns about health care and benefits costs remain worrisome

Trend 1

Employer Hiring Expectations

Market competitiveness remains the most important business objectiveTrend 2

“ Staying competitive in today’s market is key. We need to stay on top of technology because what worked once may no longer work. Others will bypass you if you do not.

- Benefits decision-maker with 3-49 employees

Fewer employers feel the “squeeze” of health careTrend 3

Costs continue to be a concern for many employers – especially small businesses

of small employers not

offering benefits cannot

financially sustain a benefits

program for their workforce

of businesses can’t afford the plans in which they currently

participate

of small businesses currently

offer benefits they can’t

continue to sustain

programs

Trend 4

Employers with HDHPs are less confident that their plans boost employee satisfaction Trend 5

Most employers believe the benefits they offer matter to workforce satisfaction and well-being

Trend 6

Value, overall costs and reputation drive employer benefits selections

of employers now making the reputation of health insurance providers a top priority.

Trend 7

88%

Employers choose benefits advisors for their strong knowledge and expertiseTrend 8

60% of employers who offer benefits say they seek the help of a broker or benefits consultant to understand their options.

Technology is the wave of the future, but nothing beats face-to-face discussions

90% of business leaders were interested in at least one enrollment or educational tool for their employees to take advantage of, including:

Trend 9

Technology helps companies, but face-to-face discussions are still important . 91 % of employers say that face-to-face conversations with benefits advisors are highly effective for enrollment.

Technology is the wave of the future, but nothing beats face-to-face discussionsTrend 9

Voluntary insurance goes hand in hand with growth and profitabilityTrend 10

Companies that offer voluntary insurance are more likely than those

that don’t to say…

Employee Results | Key Findings 2018

Employee Results – Four Areas of Focus

Strong benefits programs are linked to job satisfaction and retention

Improving the benefits package ranks second to wage increases as the biggest incentive for satisfaction.

Trend 1

A robust benefits program can be a strong recruiting toolTrend 2

A growing interest in nontraditional benefits

Trend 3

A growing share of employees express interest in flexible spending accounts, reimbursement for educational expenses and benefits that cover members of extended families.

Employees need more easy-to-understand benefits information

The need for more information is greater than the need for additional time, money or assistance to help employees feel confident in their benefit selections.

Trend 4

30% of employees say they need more information surrounding their benefits.

39% have a full understanding of their health insurance policy.

Employees need more easy-to-understand benefits information

Trend 4

16% say an easily accessible benefits provider would help improve their benefits enrollment, and more help from a benefits advisor is what they most need to feel confident in their benefits selections.

Trend 5 Employees are more likely to purchase benefits when they speak to an expert

Trend 6 Employees prefer digital technology for communications and claims

Forty-three percent of employees prefer to communicate with an insurance agent by email.

18% prefer by phone20% prefer communicating

face-to-face

43% of employees prefer to communication with an insurance agent by

email.

Many employees don’t enjoy benefits enrollment, and most choose the same benefits year after year

Trend 7

Choose the same benefits

each year rather than making

changes during open

enrollment.

Spent less than a half hour researching

their benefits options during the last open enrollment.

Trend 8 Consumers are financially unprepared for unexpected out-of-pocket costs

Trend 9 Medical events carry a high personal cost for many individuals

Experiencing adverse realities related to high medical costs or bills is highest among younger Gen-Z and millennial workers, those enrolled in high-deductible health plans and gig workers as well as those in lower to moderate income brackets.

Many look to gigs to help make ends meetTrend 10

The top reason is to make ends meet, although some report doing so to pay for health care benefits and related expenses.

Trend 11 Employees see a growing need for voluntary insurance

Voluntary insurance is growing in importance among workers for many reasons, none the least being how little money Americans have set aside for medical emergencies.

Companies can gain value by offering voluntary insurance

As health care costs continue to rise and workers take more control of their benefits decisions, voluntary insurance plans are even more relevant as key

pieces of a company’s overall benefits strategy.

Trend 12

So what’s on the horizon?

Employers must stay ahead of the game

32

The workforce is changing, and employers must look to offer benefits that attract –and protect – the entire workforce, from gig workers, to part-timers, to full-time executive level employees.

Direct via Brokers

Employer Sponsored

Accident Critical Illness Hospital Indemnity

Short & Long Term Disability

Whole & Term Life

BenExtendDental

VisionCancer

A A

Workforce Solutions

We must look beyond the standard offerings

33

Consider ancillary services that bring Day 1 value to certificate holders and are unique to each employer.

FINANCIAL WELLNESS

• Financial & Legal Fitness

• Student Loan Assistance*

• College Assistance Plan

• Medical Bill Saver

• Fraud Protection

• AflacPass

HEALTH & WELLNESS

• Telemedicine

• Online Personal

Wellness Platform

• Personal Wellness Plus*

• Health Advocacy

EMPLOYEE CARE

& CONCIERGE

• Telephonic EAP*

• EAP+ Work/Life

(in person visits)*

• Health Advocacy

The portfolio is

regularly updated to

address market trends.

Aflac’s Value Added Services portfolio is designed

to align with your benefits strategies.

PORTFOLIO UPDATES

Day 1 Value=

*Employer paid only

And always look ahead

34

Forward-thinking companies are investing in highly innovative firms designed to improve customer experience, gain efficiencies, and develop new markets that will make benefits easier for you and your employees.

Oishi Kenko

35

Value Added Services: CAIC’s affiliation with the Value-Added Service providers is limited only to a marketing alliance, and CAIC and the Value-Added Service providers are not under any sort of mutual ownership, joint venture, or are otherwise related. CAIC makes no representations or warranties regarding the Value-Added Service providers, and does not own or administer any of the products or services provided by the Value-Added Service providers. Each Value-Added Service provider offers its products and services subject to its own terms, limitations and exclusions. Value-Added Services are not available in Idaho or Minnesota. State availability may vary. Continental American Insurance Company, a proud member of the Aflac family of insurers, is a wholly-owned subsidiary of Aflac Incorporated.This offering may not supersede the terms and conditions of any existing contract the client has with Health Advocate. Health Advocate reserves the right to refuse any client group through Aflac if the client group cancels a pre-existing contract with Health Advocate prior to expiration date of the contract.Medical Bill Saver has restrictions for negotiations on in-network deductibles and co-insurance in Arizona, Colorado, District of Columbia, Illinois, Indiana, New Jersey, North Carolina, South Dakota and Utah.When medically necessary, MeMD providers can submit a prescription electronically for purchase and pick-up at your local participating pharmacy; however, MeMD providers cannot prescribe elective medications, narcotic pain relievers, or controlled substances. MeMD’s providers are each licensed by the appropriate licensing board for the state in which they are providing services and all have prescriptive authority for each of the states in which they are licensed.Continental American Insurance Company* (“Aflac Group”) has entered into a marketing alliance with Careington (Aflac Pass), where Careington (Aflac Pass) will contract directly with individuals who are employees of Aflac Group accounts, which choose to provide their employees with access to prescription discounts and to vision, dental, and hearing service discounts through Careington (Aflac Pass)’s network providers (“the Discount Pass Program”). Aflac Group's affiliation with Careington (Aflac Pass) is limited only to a marketing alliance, and Aflac Group and Careington (Aflac Pass) are not under any sort of mutual ownership, joint venture, or are otherwise related. Aflac Group makes no representations or warranties Careington (Aflac Pass)’s Discount Pass Program, and is not responsible for any Careington (Aflac Pass) products or services. Careington (Aflac Pass)’s Discount Pass Program is not available to residents or accounts located in VT or WA. Aflac Group cannot market the Discount Pass Program to accounts or residents of ID or MN and cannot market the Discount Pass Program to accounts in MO. Additional state restrictions may apply and benefits may vary by state.*Continental American Insurance Company, a proud member of the Aflac family of insurers, is a wholly-owned subsidiary of Aflac Incorporated.

The content within is for informational purposes, for broker-facing audiences only. This information is not approved to distribute to prospective insureds, to prospective accounts, or to use as a solicitation. Misrepresenting this, or any, information to solicit or induce an insured to lapse, forfeit, or surrender an insurance policy is prohibited by law. Any use not specifically permitted herein is strictly prohibited. Aflac herein refers to American Family Life Assurance Company of Columbus and/or American Family Life Assurance Company of New York and/or Continental American Insurance Company and/or Continental American Life Insurance Company.

AGC1901968 IV (8/19)

The 2018 Aflac WorkForces Report is the eighth annual study examining benefits trends and attitudes. Through many dynamic changes to the U.S. health care system, financial recovery and a rebounding job market, the study continues to track employer and employee attitudes surrounding benefits, including the types of benefits offered, the influence benefits have on business performance, as well as trends in enrollment offerings and technology. This year’s study captured responses from 1,700 employers and 2000 employees across the United States in various business sizes and industries.