If you offer employer-sponsored insurance to your employees, you should be familiar with some of the health coverage terminology used in the workplace. Open enrollment is one important term related to insurance benefits. What is open enrollment?
What is open enrollment?
Open enrollment is an annual period where individuals can enroll in, make changes to, or cancel their insurance plans. Open enrollment applies to employees who want to make changes to their employer-sponsored insurance as well as individuals who participate in the government’s Marketplace health plans. Typically, employees are not allowed to change their insurance plans outside of open enrollment.
As an employer who offers insurance benefits, you are responsible for conveying benefit-related information to employees during open enrollment.
Notify your employees about open enrollment before it starts. That way, employees can prepare for coverage changes. And, you must tell employees how long open enrollment lasts at your business. Let employees know that, for the most part, they cannot change their plans outside of open enrollment.
Tell employees about their insurance plan options for adding, changing, or removing coverage.
Discuss which employees are eligible for adding insurance benefits. Talk about single plans as well as family plans. Explain participation rules for employees’ spouses.
Employees can switch plans during health insurance open enrollment. You may offer health plans with varying deductibles, copays, coverage, and premiums. Make sure employees know how much they need to contribute each pay period to the plans. And, explain out-of-pocket expenses employees may need to pay when they seek medical care.
For example, employees might have the option to choose between a high-deductible health plan (HDHP) and a traditional preferred provider organization (PPO). You would explain that HDHPs have higher deductibles and less expensive premiums than PPOs, then give details about payment differences.
If employees want to cancel their insurance plan, tell them when their current coverage ends.
What can employees change during open enrollment?
During open enrollment, employees can make changes to any insurance-related plans you offer, including health, vision, dental, life, and disability insurance plans. They can also add, change, or remove HSA (health savings account) and FSA (flexible spending account) plans.
Generally, open enrollment does not apply to small business retirement plans for employees. Employees can make changes to their small business retirement plans at any time during the year.
When is open enrollment?
Open enrollment lasts approximately a few weeks per year. For the most part, open enrollment takes place toward the end of the year, and the changes take place at the start of the following year.
The 2019 open enrollment period for the Health Insurance Marketplace runs from November 1 until December 15. As an employer, you might use this same period for open enrollment at your business or use a different period.
Your insurance provider may set the open enrollment time frame. Talk with your provider for more information about the open enrollment period you must use.
Can employees make changes outside of the open enrollment period?
Under specific circumstances, employees can make changes to their insurance plans outside of the open enrollment period. When an employee has a qualifying life event, they have a limited amount of time to add, remove, or cancel coverage.
Examples of qualifying life events include when an employee gets married or divorced, has a baby, or loses coverage.
Unless an employee has a qualifying life event, they cannot make changes to their insurance plans outside of open enrollment.
Open enrollment and payroll
When an employee adds, changes, or removes coverage, the amount you withhold from their wages changes. Changes to insurance contributions may also change the employee’s tax liability.
Make sure to distribute and collect benefit enrollment forms from employees during open enrollment. Not only do you need enrollment forms to make changes to their plans, but you also need these forms to store in your records.
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This is not intended as legal advice; for more information, please click here.