6 Reasons Active Enrollments are Still Essential
If you take what you thought your benefits enrollment would look like this year, shake it up, turn it upside down, and then set it back down – that’s the reality of what’s panning out. However, while the pandemic continues to impact your organization, it doesn’t have to prevent you from a successful open enrollment season.
Even if your organization has pivoted to a completely virtual working environment, it’s still possible, and very important, to conduct an active versus passive enrollment.
So, what is an active enrollment?
An active enrollment requires employees to choose a benefits selection each enrollment period. Conversely, in a passive enrollment, employees are automatically re-enrolled in their current selection, with little or no involvement in the process.
Think of it this way: during a passive enrollment, some popular phrasing from HR or your benefits department may be “if you want to make a change, stop by,” or “you only need to think about your benefits if you had a qualifying event this year.”
If your organization has experienced a major health insurance claim from an ineligible dependent, or you’ve had an employee pass away only later to find there was no beneficiary listed, you likely already know the importance of an active enrollment.
Why should I make an active enrollment happen this year?
Active enrollments are packed with advantages. While there’s an upfront annual investment in time, the benefits are felt year-round. And open enrollment is the right time to help influence your employees and turn your HR expenses into savings – even when your budget is crunched and time is limited.
According to Lisa Stevens, American Fidelity Account Development Coordinator, there are six reasons active enrollments are still essential.
- Provide a chance to update Section 125 election forms. Also known as salary reduction agreements, participation in Section 125 requires an annual election in order to pre-tax premiums for medical, dental, vision, and other allowable coverages. This also includes an annual signed election for ever-popular reimbursement accounts, like a Flexible Spending Account (FSA). An active enrollment establishes an annual process for employees to benefit from the tax advantages of a Section 125 Plan.
- Ensure you’re compliant with the Patient Protection and Affordable Care (ACA): When you meet with each employee, you have documentation of compliance with the ACA Employer mandate. You have proof you offered adequate and affordable health insurance and proof that the employee waived the coverage.
- Clean up dependents. An active enrollment provides a chance for employees to remove ineligible dependents, as it requires them to verify who they want covered, as well as any changes in their coverage.
Let’s say Employee A is on the family health insurance plan. The employee doesn’t communicate to HR that he got divorced. In this hypothetical, the employee’s ex-spouse gets in a car accident and experiences a major health insurance claim. Because Employee A’s ex-spouse is still covered on his health plan, and due to ACA’s restriction on rescission of coverage, the plan may be required to pay for the medical expenses and the employee maybe responsible for that potentially very large claim.
- Encourage employees to consider all their benefits options. With the current economic state, if you conduct an active enrollment this year, you may have an opportunity to impact behavior in ways you never have before. Improving your communication and education may help your employees take better advantage of what you’re already offering.
For example, maybe you’re offering a qualified high deductible health plan (QHDHP) and a Health Saving Account (HSA) that you know is a no-brainer for your staff. However, because everyone is busy, if not required, employees may not know about the robust benefits package you’ve invested a large portion of your budget on. Without an active enrollment, your participation will likely be lower, as employees may never take the time to figure out that one plan is much more affordable than another. Natural behavior will prevail, and employees will stick with what they know for the sake of convenience.
- Provide a way to distribute required forms. There are several forms you need to distribute each year. And as a best practice, you should have your employees acknowledge receipt of these forms. If you were to experience an Internal Revenue Service audit, having documentation on file will help your organization meet any requirements when proof is requested. Some forms you can manage during an active enrollment include:
- 403(b) plan universal availability forms,
- Spousal carve out documentation,
- Cash-in-lieu, and
- Summary of benefits and coverage (SBC).
- Help update beneficiaries. Many employees list their beneficiary(ies) when first hired. But years in, marriage and two children later, employees may still have their parents listed as their beneficiary. It’s highly encouraged to update beneficiaries each year due to ongoing life changes. And even more, doing so electronically can help reduce mistakes and ensure legibility.
But how do I conduct an active enrollment if we’re working virtually?
While many organizations have wanted to get away from paper enrollments because they’re tedious, create extra work for HR, and lead to incomplete or incorrect forms, this year it’s become a necessity due to many employees working virtually.
If your organization isn’t already doing an electronic active open enrollment, there are many benefits to moving to this type of program. Electronic active enrollments provide a setting to gather all necessary information, create less room for errors, and are a way to easily track who has completed their enrollment.
But during a national health crisis, don’t stop here – employees also need support.
Combine an Active Enrollment with Guided Support
In the current virtual environment, many employers are turning to a self-enrollment online, where employees educate themselves on available benefits and enroll independently. In over 35,000 employees surveyed, only 12% said they prefer a self-enrollment.1 Employees want education and individualized support when it comes to their benefits. A guided enrollment gives employees the assistance they need to make the best decisions for their family. See how we're offering guided in-person or virtual support.
Whether you choose to partner with American Fidelity and use our online electronic enrollment platform offered at no additional cost*, or you find a platform you like, we can help your employees through a guided enrollment. One thing is for certain: open enrollment will look different this year. Consider the benefits of investing in an active enrollment to gain efficiencies for your team and your staff.
Lisa Stevens, Account Development Coordinator
Lisa has been with American Fidelity for over a decade. She works closely with school districts in Ohio and Michigan to uncover benefits issues and human resources challenges. She often speaks to associations, business managers, and superintendents on topics such as Section 125 Plans, Patient Protection and Affordable Care Act, High Deductible Plans, and Health Savings Accounts.
Lisa is licensed in Life and Health and has her Series 6 and 63 licenses. She is known for her communication abilities and can simplify difficult topics and explain them in everyday language, making implementation and understanding compliance much easier.
This blog is up to date as of August 2020 and has not been updated for changes in the law, administration or current events.