By Ron Agypt, vice president of market development and broker sales, U.S., Aflac

Now that healthcare reform is a reality, most business decision-makers are assessing what the Patient Protection and Affordable Care Act (PPACA), commonly known as healthcare reform, means for their organizations. That assessment has become a daunting challenge, impacting companies of all sizes in every industry.

Although some aspects of the new law are already in effect and must be complied with now, most of the law will be phased in over the next several years, and the regulations to implement those parts of the law may not be published for some time. Facing so much uncertainty, developing a long-term plan to comply with the law and manage healthcare costs can be a cumbersome and overwhelming task, even for the best business decision-makers.

According to the U.S. Small Business Administration, small businesses currently represent 99.7 percent of all employers; and without the financial reserves to pay consultants to sort through the requirements of PPACA, this segment will arguably be the most affected. Because of their size, smaller organizations could be significantly impacted by even a small misstep in managing healthcare costs.

Agents and brokers can continue to add value and offer expertise to their clients, particularly smaller companies, by advising small business owners to focus on the immediate requirements of the law and the solutions they have at their disposal to turn this challenge into an opportunity.

A good place to start may be to point them to the Small Business Council of America (SBCA), where small businesses can find the publication "Health Reform in a Nutshell: What Small Businesses Need to Know Now." This publication does a good job of explaining, in plain English, the major pieces of PPACA that most small businesses have questions about.

Since one of the core premises behind the law was that it would ensure that all Americans have access to affordable health insurance, PPACA is also known as the Affordable Care Act. But most experts agree that employers will continue to struggle to find ways to keep health costs down and provide access to the coverage their employees need. Many employers and their employees are looking for more flexible benefits options as they seek ways to manage rising health care expenses.

As most brokers know, voluntary insurance plans help people cope with out-of-pocket costs associated with serious accidents or illnesses–costs major medical insurance is not designed to cover. In the event of a serious accident or illness, policyholders receive cash they can use to help pay for daily living expenses such as rent, gas, groceries, travel expenses and babysitting, as well as unreimbursed medical expenses. The policyholder has full control over how to spend his or her cash benefits. And voluntary insurance plans have no direct costs to the employer making them available to employees.

For many agents and brokers, these voluntary plans can offer their clients an attractive solution to managing expenses while giving employees more control over their benefits decisions and access to additional coverage.

Although healthcare reform does not directly apply to the voluntary insurance sector, several related trends exist that will increase the demand for supplemental insurance:

  1. Flexible spending account limitations and caps likely will lead to more out-of-pocket expenditures that are not eligible for reimbursement.
  2. With the establishment of minimum benefits standards and the option to move from employer plans to exchange plans, major medical coverage will likely become more homogenous than it is today, making an employer's supplemental insurance offering a greater differentiator than ever before in the battle to attract a talented workforce.
  3. Whether insured through an employer or an exchange plan, both employers and employees will continue to grapple with rising healthcare costs. The likelihood of higher out-of-pocket expenses through increased policy cost sharing and ever-increasing unreimbursed living expenses, which major medical insurance is not designed to cover, will increase demand for supplemental insurance.

Read related: "The new healthcare law: What it means to agents and brokers."

Bottom line: Even with healthcare reform, extra cash benefits will continue to be important in the event of a serious sickness or injury. And the added protection voluntary insurance offers will continue to increase in demand. One illustration can be found in Japan, a country that has long had a national healthcare system. Even with comprehensive national health care, people in Japan have found themselves paying more and more expenses out of their own pockets. To help manage those expenses, Japanese families have found real value in owning supplemental insurance; in fact, a recent survey found more than 90 percent of all Japanese households have some type of voluntary coverage. We expect that same trend to occur here in the U.S. as employees begin to make more of their own health care spending decisions.

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Ron Agypt, a 34-year insurance industry veteran, is Aflac's vice president of market development and broker sales, U.S. He is responsible for setting corporate strategy and developing market and broker growth through a team of dedicated professionals. For more information, go to aflacforbrokers.com, call 1-888-861-0251 or send an e-mail to brokerrelations@aflac.com

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