As the year comes to a close, both employers and employees need to start making plans for the new year, including for their health coverage. These last few months of the year, usually from November to January, is the designated time for Americans to make changes to their health coverage for the upcoming year. This time is known as the open enrollment period.
For many small and medium size businesses, the annual open enrollment period is filled with complexities, paperwork, and stress over expensive annual rate hikes to their group health insurance premiums. It’s one reason why many employers are offering health reimbursement arrangements (HRAs) to put the control of health insurance back in the hands of their employees, saving them the hassle and costs.
Whether you’re renewing a group health insurance plan or your employees are shopping for their own health insurance on the open market, you need to make sure your employees are aware of the open enrollment deadlines and procedures. In this article, we’ll go over what open enrollment is, what your responsibilities are as an employer, what to do if your employees miss the deadline, and more.
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What is open enrollment?
When the Affordable Care Act was created, the open enrollment period was put into place to create a dedicated time for Americans to enroll, renew, or make changes to their health coverage.
Having this time set aside as the only time you can make changes to your coverage ensures that individuals and families don’t wait until they get sick to enroll in coverage, or switch to a more comprehensive plan when they’re about to have an expensive medical procedure.
When is open enrollment?
While the exact dates vary depending on what state you live in, the open enrollment period generally starts in the beginning of November and ends in mid December. However, some states allow residents to enroll in coverage until January or February.
Check out our state-by-state open enrollment guide to see the deadlines for your state
What do I need to do during open enrollment?
The most important responsibility you have as an employer when it comes to open enrollment is keeping your employees informed. Employees need to know that enrollment times are limited—if they don’t make their elections during the window provided, they’ll lose their opportunity to get new coverage or change their existing coverage until next year.
Communication should start early and repeat often. We recommend starting at least one month before enrollment opens to notify employees that enrollment begins November 1 and closes definitively on December 15 (modify these dates if your state exchange’s dates differ).
If you’re renewing your current group health insurance plan, you’ll need to clearly communicate where on your healthcare provider’s website employees can find forms needed to enroll, make changes, or drop coverage.
Considering canceling your group health insurance plan? Get our toolkit for everything you need
If you are using an HRA to reimburse employees for their own individual health coverage, you don’t have to worry about offering a specific plan for your employees, because they’ll choose one that works for them.
All you need to do is make the following information readily available to your employees:
- Open enrollment dates for their state
- The website where they can view plans and enroll in coverage
- This could either be healthcare.gov or a state exchange
- The HRA allowance you will offer them so they can budget when choosing plans
- A reminder for employees to secure documents to prove and attest to a purchase of qualifying coverage
- While only the individual coverage HRA (ICHRA) requires specific plans in order for employees to be eligible, employees with a qualified small employer HRA (QSEHRA) need to purchase a plan that counts as minimum essential coverage (MEC) in order for their reimbursements to be tax-free
If you offer an HRA with PeopleKeep, our award-winning customer support team and user-friendly software will help you keep your employees informed by sending them automated communications, in-app messages, and hosting live chat sessions.
Learn more about how PeopleKeeps HRA administration software can help your organization
What if an employee misses open enrollment?
If an employee misses the deadline to make changes to their coverage during open enrollment, a couple of things may happen. If they were already enrolled in coverage, then they’ll simply be automatically enrolled in the same plan for next year.
However, if an employee wasn’t enrolled in any coverage, they will not be allowed to join a health plan until the next open enrollment period. The only exception to this rule is if an employee has a qualifying life event that opens a special enrollment period.
Note: Being offered an ICHRA or a QSEHRA, no matter what time of year, is a qualifying life event that opens a special enrollment period where employees can purchase coverage within 60 days of being offered their HRA.
What if an employee doesn’t want coverage?
Open enrollment is also the time for employees who don’t want coverage to opt out of their health benefits. This may be the case for employees who are already covered by a spouse’s or parent’s plan, older employees enrolling in Medicare, or for those who simply don’t want any kind of coverage.
Employers must document waivers of coverage and keep that information on file for at least three years. If you have a group health insurance plan, your insurance carrier can provide waiver of coverage forms. If you are reimbursing coverage with an HRA through PeopleKeep, we keep records of employees’ opt-in and opt-out decisions for you.
The opt-in/opt-out forms must be signed, dated, and submitted during open enrollment.
Tip: Keep an eye on the total number of your employees who opt in. Group health insurance plans have minimum participation requirements, as do some ICHRAs, depending on your plan design.
Remember that if you’re offering an ICHRA, employees are required to have a qualifying form of individual coverage in order to participate. However, if you’re offering a QSEHRA, all employees are eligible to participate regardless of their insurance status. Uninsured employees will simply receive reimbursements on a taxed basis unless they sign up for a plan that qualifies as MEC.
What if an employee doesn’t want coverage?
Employees have the right to opt out of insurance coverage, but may only do so during open enrollment or if there is a qualifying life event (for example, marriage, divorce, or birth of a child).
Employers must document waivers of coverage and keep that information on file for at least three years. If you have a group plan, your insurance carrier can provide waiver of coverage forms. If you are reimbursing coverage with an HRA, vendors like PeopleKeep keep records of employees’ opt-in and opt-out decisions for you.
The opt-in/opt-out forms must be signed, dated, and submitted during open enrollment.
Tip: Keep an eye on the total number of your employees who opt in. Group health plans have minimum participation requirements, as do some ICHRAs, depending on your plan design.
Conclusion
Open enrollment is a great time to start thinking about your employer-sponsored coverage and make sure you’re offering the best health benefits you can to help recruit and retain top talent. If you’re interested in signing up for an HRA with PeopleKeep, our personalized benefits advisors can help!
Schedule a call with a personalized benefits advisor to get your HRA questions answered
This article was originally published on November 9, 2020. It was last updated September 30, 2021.
