As each year ends, employers and employees must start making plans for the new year—and their health coverage is no exception. November through January is generally 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.
Whether you’re renewing a group health insurance plan or offering a benefit that enables your employees to shop for their own health insurance on the individual market, you must ensure your employees know the open enrollment deadlines and procedures.
In this article, we’ll go over everything you need to know about open enrollment, including your responsibilities as an employer and how you can help your employees prepare.
What is open enrollment?
Open enrollment is an annual period of time for Americans to enroll in, renew, or make changes to their health insurance coverage. The federal government implemented open enrollment after the Affordable Care Act (ACA) came into law, along with the addition of public health exchanges.
An open enrollment window ensures that individuals and families don’t wait until they get sick to obtain health insurance or switch their current plan to more comprehensive coverage when they’re about to have an expensive medical procedure.
Other reasons an employee may want to review their plan options include changing provider networks, getting greater prescription drug coverage or specialized medical services, or applying for premium subsidies.
When is open enrollment?
The exact dates for open enrollment vary depending on what state you live in. But, for most states, the open enrollment period generally starts on November 1 and ends on January 15. If an employee enrolls by December 15 and pays their first month’s premium, their coverage will become active starting January 1 of the following year.
Some states like California, the District of Columbia, Massachusetts, New Jersey, New York, and Rhode Island allow residents to enroll in coverage until late January. In this case, any individual who enrolls or changes their health coverage between mid-December and mid-January will have active coverage on February 1.
Idaho and Maryland are the only states to end open enrollment early on December 15 each year.
What do I need to do during open enrollment?
If you’re an employer that offers health benefits, your greatest responsibility during open enrollment is keeping your employees informed of any pertinent dates and details regarding your health plan. If they don’t make their elections during the annual 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. Notify employees at least one month before enrollment opens to help them prepare.
If you’re renewing your current group health insurance plan, you’ll need to share your healthcare provider’s website so employees can find the forms they need to enroll, make changes, or drop coverage.
Many small and medium-sized businesses (SMBs) don’t have a group plan due to the annual rate hikes, participation requirements, and costly health insurance premiums group policies come with. These employers can offer a health reimbursement arrangement (HRA) as a health benefit to control their budget and give their employees greater flexibility over their healthcare.
If you’re using an HRA to reimburse employees for their own individual health insurance plan, you don’t have to worry about offering a specific plan for your employees—they’ll choose one that works best 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 review coverage options and enroll in a plan
- The HRA allowance you will offer them so they can budget for their monthly premium when choosing plans
- A reminder for employees to secure documents to prove and attest to a purchase of qualifying coverage
- Employees with a qualified small employer HRA (QSEHRA) must buy a plan that meets minimum essential coverage (MEC) to get tax-free reimbursements
- The individual coverage HRA (ICHRA) requires employees to have a qualifying form of individual health coverage to participate in the benefit
- Uninsured workers or employees with health plans that don’t meet MEC can still participate in the QSEHRA, but they’ll have to pay taxes on their reimbursements.
If you offer an HRA through PeopleKeep, our award-winning customer support team and user-friendly benefit administration software will help you keep your employees informed through automated communications, in-app messages, and live chat sessions.
What if an employee misses open enrollment?
If an employee misses the enrollment window to make changes to their health plan, a couple of things may happen. If they already had coverage, their insurance carrier may automatically enroll them in the same plan for the following year. HealthCare.gov1 may also automatically enroll them in a similar plan if their current plan is no longer available. But only some state-based exchanges do this automatically.
If an employee had no coverage, they can’t enroll in a healthcare plan until the next open enrollment period. The only exception is if an employee has a qualifying life event. In this case, the employee would trigger a special enrollment period, and they have 60 days from the qualifying event to make changes to their health insurance outside of open enrollment.
When you offer your employees an ICHRA or a QSEHRA for the first time, it’s considered a qualifying life event and triggers a special enrollment period—no matter what time of year. Employees can buy individual coverage within 60 days after you first offer them their HRA.
What if an employee wants to opt out of coverage?
Open enrollment allows employees who don’t want coverage to opt out of their health benefits. This may be the case for employees already covered by a spouse’s or parent’s plan, older workers enrolling in Medicare, or those who simply don’t want coverage. These employees can only opt out during open enrollment or if they have a qualifying life event.
To ensure they’re making an informed decision, employees must sign, date, and submit a waiver of coverage form, and employers must keep the information on file for at least three years. If you have an employer-sponsored plan, your insurance company can provide waiver of coverage forms.
If you’re using an ICHRA through PeopleKeep, we keep records of employees’ opt-in and opt-out decisions for you.
While your employees have the right to opt out of coverage, it’s essential to keep an eye on the total number of your employees who opt in. Group health insurance plans have minimum participation requirements to prevent adverse selection.
So, if you don’t meet the minimum, you may have to explore alternative options. Small organizations can purchase a small group health plan, like a policy through the Small Business Health Options Program (SHOP)2. Any organization can choose a health benefit without participation requirements, like an ICHRA.
Making decisions about health insurance can be time-consuming and confusing for employers and employees alike. That’s why it’s important to do your research before open enrollment, when you’ll review your employer-sponsored coverage and ensure you’re offering the best health benefits possible to attract top talent and keep your employees happy.
If you’re an SMB interested in signing up for an HRA, PeopleKeep can help! We can set you up with an easy-to-manage health benefit for your organization that your staff will love.
This article was originally published on November 9. 2020. It was last updated on October 6, 2023.