Annual open enrollment can be difficult for employers as they prepare to communicate their benefits package to employees effectively. In WTW’s 2022 Global Benefits Attitudes Survey, 39% of respondents indicated health benefits were a top reason to move to a new job, while 60% of respondents cited health and retirement benefits as a reason to stay.
Thus, a poorly designed open enrollment strategy can negatively impact employee retention efforts. In contrast, effective open enrollments can help bridge the gap in employees’ benefit knowledge, thereby increasing employee satisfaction and company loyalty.
By taking an active approach to employee benefits education and leveraging their HR software tools, employers can optimize their open enrollment processes to fit the needs of their employees. In doing so, employers are ensuring employees can make educated decisions when selecting benefits packages while streamlining the process for HR departments.
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What is open enrollment?
Open enrollment is an annual period when employees can elect or make changes to their benefit plans, such as health, dental, vision, pet, or life insurance. Employees may also enroll or change retirement, short-term disability, or long-term disability benefits. However, some employers may allow employees to enroll or change these benefits at any time after satisfying specific waiting period criteria.
For federal marketplace insurance in the U.S., open enrollment runs between November 1 and December 15 every year. Private-sector employers may follow this same timeframe for their open enrollment, but it is not a requirement. For example, suppose an employer’s benefit period coverage runs between July 1 and June 30 every year (instead of January 1 to December 31). In that case, open enrollment may occur 2-4 weeks before the new benefit period starting on July 1.
Employers with at least 50 full-time employees are considered Applicable Large Employers (ALEs) under the Affordable Care Act (ACA). ALEs must offer full-time employees a healthcare insurance plan that covers at least 60% of the total medical services costs and includes substantial coverage for doctor and inpatient hospital services. For 2023, employee contributions to their monthly premiums cannot exceed 9.12% of their household income to remain affordable.
As long as ALEs meet the minimum requirements under the ACA, the variety of benefit plans offered to employees during open enrollment is unique to each business. Employers are responsible for notifying employees about open enrollment in an easy-to-understand manner so that employees can make informed decisions on their benefit options.
Tips for a successful open enrollment season
An effective open enrollment process can mitigate the confusion surrounding benefit choices for employees and increase engagement. By following the tips below, employers can get a jumpstart on their open enrollment policies and procedures.
Understand employees’ priorities
Because workforce demographics vary from employer to employer, it’s important to analyze the data to determine how best to tailor open enrollment communications to the company’s audience. For example, new families may appreciate learning about benefit plans with extensive pediatric coverage or Flexible Savings Accounts (FSAs) that cover childcare expenses. Meanwhile, workers nearing retirement may want to receive messaging about retirement plans to help save for post-employment healthcare.
Similarly, employers should utilize communication methods that best target their workforce. For instance, remote workers may appreciate learning about their benefit options during open enrollment through virtual benefit fairs or webinars they can attend or watch at their convenience. On the other hand, workers with complex life concerns may want personalized one-on-one sessions with HR or managers to discuss benefit options that cover their particular circumstances.
According to Justworks’s 2022 Health Insurance Knowledge Snapshot, 72% of employees want someone to tell them the best health insurance for their situation. Therefore, employers who take time on the back end to prepare their open enrollment benefit messaging can assist employees in their decision-making. Moreover, not every employee digests information the same way. Therefore, providing multiple ways for employees to access information on benefits during open enrollment can help accommodate employees with varying levels of time or tech-savviness.
Actively inform employees of their benefits options
An active approach to open enrollment means employers take steps to inform and educate employees about their benefit plans for the new benefit year. Employees will also have to take steps to either enroll in a new benefit plan, change coverage, keep the same (or equivalent) coverage, or waive coverage. In contrast, a passive approach involves no involvement of employers or employees in the benefits enrollment process. Instead, employees continue their plans from the previous benefit year to the next.
Although a passive approach requires little effort from the employer or the employee, it is not the best approach. Employers end up leaving employees in the dark about their benefit options which may result in employees paying more for a plan with coverage they don’t necessarily need. Moreover, employers could violate the ACA by failing to notify full-time employees about their affordable healthcare options. In fact, inconsistent open enrollment procedures could be the basis of a discrimination case if employers only educate and offer benefits to certain employees over others in the same or similar circumstances.
HR and managers should educate themselves about company benefits plans so they, in turn, can effectively educate their employees. Requiring documentation from employees, whether on keeping their plans, changing them, or waiving coverage, can also serve as evidence that employees were offered and informed about the benefits available to them.
Keep communication simple
Don’t overwhelm employees with lengthy emails and benefit booklets and expect employees to be able to make a decision quickly about their benefit plans. Too much information at once could cause a kind of benefit decision “paralysis,” where the fear of making the wrong decision overrides employee motivation to choose appropriate healthcare options and retirement savings for their particular situation.
To combat this, companies should forgo lengthy benefit presentations or talks that focus on flipping through benefit booklets in heavy detail. Instead, communications should be simple by underscoring the main points while providing resources to find more information if needed. For instance, employers can notify employees of open enrollment with short emails that include graphics, date reminders, and links to in-depth benefit booklets or benefits administration portals. Similarly, one-page posters listing open enrollment steps and who to contact for more information can be posted in break rooms or on communication boards for companies with primarily onsite workers.
Open enrollment communication should include more than just one notice to employees. Some information may be easier to explain through various forms of communication that employees can process in bite-sized pieces. However, the messaging should remain simple enough for employees from all backgrounds to get the information they need to make their benefits decisions timely.
Utilize benefits administration software
If available, employers should leverage their benefits administration software or other decision support tools to make the open enrollment process easier. Although no open enrollment laws mandate companies use such systems, employers can eradicate many of the pain points associated with open enrollment by adopting benefits administration software as a tactical solution for the business.
For example, benefits administration software can reduce the time needed for employers to manually enroll employees in benefit programs by allowing employee access to online self-service portals. This information is then transferred securely over to insurance carriers through carrier feeds. Namely and Everything Benefits by UKG are two solutions where employees can enroll, make changes, or waive benefits from their employee portals. Once complete, these tools automatically communicate the changes to both HR and carriers without HR having to lift a finger during the benefits enrollment process.
Benefits administration software can also automate open enrollment notifications and target specific employees who have yet to participate in the process. For instance, Rippling’s benefits administration system has multiple workflow templates that employers can install to perform specific automated tasks. Such workflow “recipes” include open enrollment deadline reminders or benefits enrollment notifications. Employers can also modify these workflows so communications align with the company’s audience.
Benefits administration software forces employees to take action during the open enrollment process, thereby increasing employee engagement. Employees can easily compare plans, see how much they cost and affect their paychecks, and even get access to plan descriptions for information on their particular life circumstances. With employees more likely to stay at a company with transparent benefit offerings, a streamlined open enrollment process with benefits administration software can help companies improve employee satisfaction and mitigate attrition.
Also read: 7 Questions to Consider Before Choosing a Benefits Administration System
Effective open enrollment improves employee retention
Effective communication around open enrollment helps employees select the benefits that best fit their particular life circumstances. With the rise in inflation, employers should provide employees the opportunity to reevaluate their benefit plan structures to compensate for increased financial hardship.
However, employers who invest time in developing and implementing an effective open enrollment strategy can strengthen employee loyalty and decrease willingness to leave. Overall, an effective open enrollment process ensures employees feel valued and supported by their employer and can be a crucial factor in retaining top talent.
A great software solution during open enrollment can help you stay in compliance with the ACA and gain valuable insights into what benefits are the most important to your employees. Check out our HRIS Software and Benefits Administration Software guides to find solutions that best address your unique needs.