Introducing… Dental (A-81000 Series)

2

Field Sales Guide

• Provides standard information only • Available online via AFLAC University • Review administrative guidelines for state- specific information

Section 1

Introduction

AFLAC Dental

• First introduced in 2000 • $60 million in 2001 • 2003 – reduced group size and participation requirements • 2004 – opened to nonpayroll sales 4 Page 11

People Want Dental Insurance

• The ADA recommends two dental cleanings per year • Having dental insurance and getting the recommended cleanings allows policyholders to realize immediate benefits • Dental insurance consistently ranks high in employee benefit polls 5 Page 11

The Small Employer Market

• Often don’t offer dental insurance because of the cost • Want a simple product that is not complicated by provider networks, pre- certification, etc.

• Nonpayroll rates available if needed 6 Page 11

The Large Employer Market

• Provider networks and pre-certification help to reduce costs • Often employer-paid • 90% of employers with at least 500 employees already offer dental benefits 7 Page 12

Focus on Small Businesses

• Only 56% of all employers offer dental benefits • Small employers need dental insurance!

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What’s New with AFLAC Dental?

• Fewer options • X-Ray Benefit • 3-month waiting period for fillings • Increased benefits • Orthodontic rider covers everyone 9 Page 13

What’s New with AFLAC Dental?

• New Cosmetic Rider • Provider education tools • Enhanced brochures • Streamlined competitive replacement process 10 Page 13

Section 2

The Dental Insurance Market

Medical vs. Dental Insurance

Medical

• Spread of risk; price is based on an estimate of how many people will use it • Out-of-pocket expenses are capped for the policyholder

Dental

• High utilization; most everyone will use it • Yearly benefits are capped to control expenses • Focus on preventive benefits 12 Page 17

Types of Dental Insurance

• Indemnity Plans • PPOs • HMOs • Table of Allowances • Direct Reimbursement • Discount Plans 13 Page 18

Indemnity Plans

• “Traditional” dental insurance • Based on usual, customary, and reasonable (UCR) fees – – – 100% for preventive care 80% for restorative services 50% for major services • Annual maximums • Usually a deductible 14 Page 18

Preferred Provider Organizations (PPOs)

• Provider network • Providers agree to pre-set fees and savings are passed to the insured • Usually no deductible • Patient can go out of network, but will incur higher costs • Exclusive Provider Organizations (EPOs) do not cover out-of-network treatment 15 Page 18

Health Maintenance Organizations (HMOs)

• Capitation plans • Preventive and basic services usually performed at no charge • Patient may have a co-payment for major services • Raises concerns about the quality of treatment 16 Page 18

Table of Allowances

• Similar to AFLAC’s definition of “indemnity” • Fixed benefit is paid for each procedure, regardless of charges • Patient chooses dentist • AFLAC Dental is a table of allowances plan 17 Page 18

Direct Reimbursement

• Self-funded by employer • Patient pays dentist and files for reimbursement with employer • Reimbursement based on charges, not type of treatment • Patient chooses dentist • The ADA promotes direct reimbursement plans 18 Page 19

Discount Plans

• Not a form of insurance • Requires a membership fee • Participating dentists provide discounted services • No benefit maximums • Typically quote a savings of 20%-50% 19 Page 19

Categories of Benefits

• Preventive, Diagnostic, and Emergency – Oral examinations, cleanings, X-rays – Fluoride applications, sealants • Routine or Basic Care – – Fillings Routine oral surgery, periodontal care • Complex or Major Care – Crowns – Complex oral surgery, extensive care 20 Page 19

Section 3

Plan Structure

Original AFLAC Dental

• 6 levels of coverage • Too many options • Higher Wellness Benefit consistently outsold lower benefit – – Level 4 Level 3 – 38% – 3% 22 Page 23

New AFLAC Dental Options

Basic • $25 wellness • Lowest benefit schedule Standard • $50 wellness • Mid-range benefits Premier • $50 wellness • Higher tier of benefits 23 Page 23

Waiting Period

• Period of time after effective date for which benefits are not payable • Controls costs by preventing immediate claims • Reduces the chance that a person will buy dental insurance because he or she needs a specific procedure • Compensates for little underwriting 24 Page 24

Waiting Periods:

• Start over on the date of reinstatement • Begin on the effective date of a dependent’s addition to the policy • Apply to increased benefit amounts for conversions • Run from the original effective date for downgrades 25 Page 24

Waiting Periods

Dental Wellness Benefits X-Ray Benefit Other Preventive Benefits Other Diagnostic Benefits Fillings and Other Basic Restorative Benefits Crowns and Other Major Restorative Benefits Root Canals and Other Endodontic Benefits 26 Page 24 None None 6 months 3 months 3 months 12 months 12 months

Waiting Periods

Gum Treatments/Periodontic Benefits Dentures and Other Prosthetic Benefits Repairs and Adjustments to Prosthetics Benefits Extractions and Other Oral Surgery Benefits Pain Relief and Other Adjunctive Services Benefits Orthodontic Benefit Rider Cosmetic Benefit Rider 27 Page 24 6 months 24 months 6 months 6 months 3 months 24 months 24 months

Policy Year Maximums

• Maximum benefits payable per covered person per policy year • Does not include Wellness and X-rays – Basic - $1,200 – Standard - $1,400 – Premier - $1,600 28 Page 25

Section 4

Policy Benefits and Provisions

Wellness Benefit

• Pays for one listed treatment per visit • Visits must be separated by 150 days or more • Payable twice per person, per policy year Examples: – – – Oral evaluations Cleanings Fluoride applications 30 Page 29

X-Ray Benefit (new!)

• Pays for one listed X-ray procedure per visit • Payable once per person per policy year – Basic - $10 – Standard - $25 – Premier - $25 31 Page 29

Schedule of Dental Procedures

• Benefit amounts are listed by ADA code • If ADA codes change, we will pay an amount comparable for the procedure • Procedures may fall under more than one category • Only the schedule varies among the different plans – waiting periods, limitations and exclusions, etc. are the same 32 Pages 29-44

Orthodontic Benefit Rider

• Applies to all covered persons (new!) • After 24 month waiting period, pays: – $600 for initial orthodontic treatment – – $200 every third month for continued treatment Covered treatments listed by ADA code • $1,200 lifetime maximum per person • $2,400 maximum per policy year • Payroll sales only 33 Page 45

Cosmetic Benefit Rider (new!)

• Applies to all covered persons • After 24 month waiting period, pays for specific procedures at benefit amounts listed • Examples: bleaching teeth, veneers, etc.

• $1,800 lifetime maximum per policy • $600 maximum per policy year • Payroll sales only 34 Page 46

Limitations and Exclusions

• Procedures not listed in the schedule • Services not recommended by a dentist or not required for oral health • Repairs to dental work within six months of initial work • Replacement prosthetics within five years of last placement • Treatment involving crowns within five years of last placement 35 Page 47

Limitations and Exclusions (continued)

• Replacement for inlays or onlays within five years of last placement • Treatment received while outside the U.S.

• Sealants: – – Secondary molars for children under 16 Not more often than every five years • Replacement of teeth missing before the effective date of coverage 36 Page 47

Section 5

Administrative Guidelines

Eligibility Requirements

• Issue ages: – 18  65 on payroll – 18  64 on nonpayroll • No minimum group size for payroll • Dependent ages 19/23 • Optional riders available for payroll sales only • If supplementing existing dental insurance, only the Basic policy may be offered 38 Page 67

Administrative Guidelines

• Flex: – Base policy and Ortho Rider eligible for pre-tax – Cosmetic Rider is after-tax only • Advanced Effective Date (new!) – – Up to 90 days from enrollment date More than 60 days requires Statement of Understanding 39 Page 67

Additional Forms

• Replacement Notice – if replacing another carrier’s dental policy • Outline of Coverage – if required in your state •

Guide to Health Insurance for People with Medicare

– if applicant is eligible for Medicare 40 Page 68

Renewable/Portable

• Guaranteed renewable for the policyholder’s lifetime • Payroll rate may be retained after one month’s payment through payroll deduction • Changes once on direct billing will be subject to direct rates, underwriting, and eligibility rules 41 Page 68

Missed Payments

• Dental uses a shorter lapse cycle – Status 13 (no premiums received) – Will be notified after the second missed invoice and will lapse in 30 days – Status 22 (active) – Will be notified after the first missed invoice and will lapse in 30 days • No claims paid on policies more than 90 days in arrears, regardless of policy status 42 Page 69

Section 6

Sales Support Materials

Brochures

• Brochure folder A81075 • Insert for each policy: – Basic A81175 – – Standard A81275 Premier A81375 • Inserts list every covered procedure and benefit amount (new!) 44 Page 73

Additional Pieces

• Rider inserts: – Orthodontic A81076 – Cosmetic A81077 • Mailer A81090 – Suitable for both payroll and direct prospects • Employer Flyer MMC-00-236 – Intended for employers - also used with Dental A-80000 Series 45 Pages 73-74

Provider Education Tools (new!)

• Tent card M1078 • www.aflacdental.com

• Both provide tips for completing the ADA claim form and filing claims electronically • Web site allows provider to enter policy number and ADA codes to retrieve benefit information – – Active policies only Only when policy record is available 46 Page 73

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Section 7

Applications/Underwriting

Applications

• Payroll A81001 • Nonpayroll A81002D • Applicant’s section includes a space for the dental provider’s name • Replacement questions: – – – Only Basic plan allowed if keeping other dental insurance Must convert an existing AFLAC policy Replacement Notice may be required 51 Page 77

Dependent Information

• Dependents must be listed on application • Complete Supplement Form A-80005 – if more than eight dependent children and provide proof of dependent status • Use form A81003 to add newborns and adopted children within 31 days 52 Page 77

Underwriting

• No underwriting for payroll applications • Nonpayroll applications have one question: –

Have you or has anyone to be covered been diagnosed with or treated for any gum disease such as gingivitis within the last 24 months?

• Any such person will not be covered 53 Page 78

Conversions

• Use new business applications • Check conversion box and provide current policy number • For increased benefits, new waiting periods apply only to the increase in coverage • For reduced benefits, waiting periods run from the original effective date 54 Page 78

Continuous Coverage

• Spouse’s coverage terminates at divorce; may apply for equal or lower coverage without evidence of insurability • If primary dies, spouse becomes primary insured • Dependent children must apply within 31 days of losing dependent status to avoid interruption in coverage 55 Page 78

Section 8

Rates and Commissions

Rate Comparison

New Plan

Basic

Original Plan

Level 2

Aggregate Premium Increase

6%

Aggregate Benefit Increase

17% Standard Premier Level 4 Level 6 9% 20% 21% 19% 57 Aflac_Project Name_Date

Forms

• Rate sheet – M-RS069-1 • Premium work sheet – A90137-1 • Field Sales Guide includes standard rates only 58 Page 93

Commissions

New Associate Basic Plan New Associate Other Plans Veteran Basic Plan Veteran Other Plans First Year

25.00% 20.00% 14.00% 10.50%

Renewals

6.10% 5.10% 10.90% 9.60% 59 Aflac_Project Name_Date

Section 9

Competitive Replacements

Requirements

• Competitive replacements allow reduced waiting periods under the following conditions: – Fifty or more eligible employees – Replacing a group dental plan that has been in place for at least one year – At least 70% participation in AFLAC Dental • Conversions of existing AFLAC Dental policies do not count toward participation requirements.

61 Page 101

Reduced Waiting Periods

• Available only during the initial enrollment period. • Anyone applying after this time, including new employees, will receive standard waiting periods.

• All competitive replacement requirements must be met to receive reduced waiting periods.

62 Pages 101-102

Request Form

• Competitive Replacement Checksheet Form M0978R – Submit with paper applications – Submit at least seven days prior to SmartApp ® enrollments, then download group update to access the applications • Form M0978R is available on Associate Services 63 Page 101

Application (new process!)

• Form A8101T • Applicant must indicate whether or not standard waiting periods are acceptable, in case all requirements are not met.

• This prevents you from having to go back and obtain standard applications.

• Advise applicants to check their Policy Schedule for waiting periods.

64 Page 102

Commissions

New or Veteran Associate:

Basic Plan All Other Plans Riders First Year

7.50% 7.00% 2.35%

Renewals

7.50% 7.00% 2.35% 65 Page 103

Section 10

Claims

Filing Instructions

• ADA Claim Form HF004 • Electronic claims preferred • Typed claim forms should be mailed • Claim checks will not be mailed to the associate • Most payments will be made to the provider; if an overpayment, the provider should reimburse the insured 67 Page 111

Claims Guidelines

• ID cards are contained in the policy and reference the provider Website • No claims paid on policies more than 90 days in arrears • Please do not send X-rays • ADA code revisions may be requested from the Customer Call Center 68 Page 111

Section 11

Marketing AFLAC Dental

Key Features

• No: – Provider network – – – Pre-certification Deductible Coordination of benefits • Simple plan design • Individually owned • Rate stability 70 Page 117

Understanding Group Dental

• UCR charges do not necessarily reflect what an individual provider will charge • Percentages cannot easily translate to a benefit amount until charged • High participation requirements, may also require employer contribution • Policy owned by the group 71 Page 118

The AFLAC Advantage

• Table of allowances makes benefit determination easy!

• Freedom to choose any dentist • Individually owned • Portable • Rates not tied to group experience • Contract is between AFLAC and individual 72 Page 118

How Much Coverage is Needed?

• Highest level not always appropriate • Dental treatment unlikely to cause catastrophic financial consequences • Benefits should reduce out-of-pocket expenses, not necessarily eliminate them • Overselling may take premium dollars from other AFLAC products 73 Page 119

“Saving” for Rider Benefits

• Ortho Rider – 34 months to receive full individual benefits – – Individual benefits = $1,200 34 individual monthly premiums = $918 • Cosmetic Rider – 49 months to receive full benefits – – Full benefits = $1,800 49 monthly premiums = $1259.30

• Ortho Rider also has pre-tax advantage 74 Aflac_Project Name_Date

Section 12

Dental Terminology (self study)

Section 13

Forms List (self study)

Thank you and Good Luck!

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