Overview of Open Enrollment

Open enrollment (OE) is a critical time for both employers and employees when it comes to workplace benefits. As the period when workers can review their benefit options and make elections for the upcoming plan year, open enrollment sets the foundation for engagement, productivity, and satisfaction over the next 12 months. 

Let’s start with defining open enrollment: This is the time frame when employees and individuals can enroll in or change their health insurance and other benefits plans, such as dental and vision. It’s an annual event and typically occurs once during a 12-month calendar year.  

Typically lasting 30 days, OE enables employees to evaluate their current benefits, compare plan options, and elect the coverage that best fits their needs. Choices often include: 

• Health insurance (medical, dental, vision) 
• Life and disability insurance 
• Flexible spending accounts (FSA, HSA, HRA) 
• Retirement planning (401k, pensions) 
• Commuter benefits 
• Supplemental insurance 
• Wellness programs 

Open enrollment periods usually take place in the fall to align with the upcoming calendar year benefits cycle. However, the specific timing varies by employer. The annual process involves education, selection, confirmation and implementation. 

Employer and employee responsibilities 

Both employers and employees play key roles in the open enrollment process: 

Employer responsibilities: 

• Educate workers on plan options 
• Provide enrollment details, deadlines, forms 
• Make any necessary payroll deductions 
• Submit enrollment info to carriers 
• Ensure legal compliance 

Employee responsibilities: 

• Review current benefits elections 
• Compare all available plan options 
• Ask clarifying questions 
• Make new elections by the deadline 
• Submit any required documents 
• Understand selections are binding 

What is the purpose of open enrollment periods? 

For employees, the purpose of open enrollment is straightforward: individuals can sign up for or change their benefits coverage. 

For insurance companies, the purpose of an open enrollment period is to minimize risk. By having a set timeframe for insureds (employees) to add, change or remove coverage, insurance companies are able to assess their member population and more accurately estimate the cost of providing healthcare services. This allows insurance companies to reduce the financial risk of insuring both healthy and sick members, which ultimately helps keep premiums lower. 

For employers, the open enrollment period serves several purposes, including: 

• Benefit planning: Open enrollment allows employers to plan and budget for employee benefits. It provides a structured timeframe in which employers can assess their benefit offerings, negotiate contracts with insurance providers, and make any necessary adjustments based on the upcoming year’s financial goals, resources and budget. 
• Employee choice: Offering a designated period for enrollment, employers ensure that employees have an annual opportunity to consider changes in their circumstances, such as marriage, the birth of a child or changes in health, and adjust their benefit selections accordingly. 
• Compliance: Open enrollment helps employers meet legal and regulatory requirements. Certain benefit programs, such as health insurance under the ACA in the United States, have specific enrollment periods mandated by law. Employers must adhere to these guidelines to remain in compliance and avoid potential penalties or legal issues. 
• Benefit communication: Open enrollment provides a dedicated opportunity for employers to communicate and educate employees about their available benefit options, plan details, and any changes in coverage. It allows employees to ask questions, seek clarification, and ensure they are well-informed when making choices about their benefits. 
• Administrative efficiency: By consolidating benefit changes within a specific period, employers can streamline administrative processes. Open enrollment periods also enable HR departments to process and update employee records, coordinate with benefit providers, and ensure a smooth transition to the new benefit year. Centralizing the enrollment process helps minimize disruptions and reduce administrative burdens throughout the year. 
• Cost management: Finally, a set open enrollment period helps employers manage the costs associated with employee benefits. By assessing employee benefit selections, employers can evaluate the overall financial impact and make informed decisions about benefit offerings for the upcoming year. Enrollment choices made during open enrollment allow employers to control costs, negotiate favorable rates with providers, and maintain a sustainable benefits program. 

In short, open enrollment serves as an important compliance, communication, administrative, and cost management tool for employers. By taking advantage of this opportunity, employers can ensure their benefit programs remain manageable and in compliance with applicable laws.