Although it seems like you just wrapped up the last open enrollment (OE) period, it will be here again before you know it. Under the Affordable Care Act (ACA), all applicable large employers must offer coverage to at least 95 percent of their full-time workers or risk a penalty under employer shared responsibility provisions, according to the IRS. To be in compliance, you must provide full-time employees the opportunity to accept or decline coverage annually.
Prior to the ACA, there was no government regulation requiring annual open enrollment periods, though most employers had them because of contract requirements, collective bargaining agreements or Section 125 cafeteria plan rules (per the IRS, cafeteria plans allow employees to use pre-tax funds to pay for specific benefits, such as health insurance). But with the ACA in place, an annual election period is required.
As you think back on the lessons learned from past open enrollment periods, you'll likely see areas where improvements could be made. Were you scrambling to distribute the standardized coverage description forms required under the ACA? Did you fail to adequately track coverage offers and employees' responses to the offers, resulting in problems when it was time to compile your informational reports for the IRS? Were your employees bewildered by the process of selecting the best health plan to fit their needs, and looking to you for answers?
Here are some ways to leave those headaches behind and have a smooth and compliant open enrollment period this year.
Open Enrollment Is Your Chance to Highlight Your Benefits
Communicate to your employees early, and send reminders before and during open enrollment. The more channels of communication you use, the better — wether email, video, mobile, infographics, old fashion home mailers or in-person meetings. Open enrollment is an opportunity to give employees solid information about their options.
Heading into this year, employees will appreciate it if you explain the changes brought by the ACA and the options available to them, clearly, concisely without all the confusing jargon and acronyms. The more clear you are up front, the less time you'll spend fielding emails and calls. But, keep it simple — your employees don't want a five-page explanation of actuarial value. What they do want is transparency and honesty. Decision support tools such as benefits calculators are an easy way for your employees to evaluate and compare plans and options, helping them find the plan that best fits their individual needs.
You should also loop in your management teams ahead of time. Employees will invariably have questions once they get their enrollment information— and the more everyone is on the same page, the easier the process will be.
Consider Overlapping Open Enrollment With the Individual Market
For individual market coverage, open enrollment begins November 1, and that will continue to be the case going forward. Unlike the individual market, however, there's no specific time frame when employer-sponsored plans must run their open enrollment.
But it helps employees if you structure your open enrollment to overlap with open enrollment for the individual market, giving them an opportunity to compare the plans you're offering with the individual market plans. If this isn't possible, IRS Notice 2014—55 gives you the option of allowing employees to revoke coverage elections under a cafeteria plan and enroll in an exchange plan instead, per the IRS.
Mind the Fine Print
Beyond communication and timing, if you're not careful, a number of potential pitfalls and sticky spots could muddy the ACA compliance waters.
Here are three to pay close attention to:
1. Have a System for Documenting Coverage Offers
Whether an employee accepts or declines, this information is necessary when you report to the IRS.
2. Check Grandfathered Plans
If you have a grandfathered plan, you should determine if the plan will be grandfathered this year. If changes are being made that cause the plan to lose its grandfathered status, you'll have to make sure it's brought into compliance. Sort out these details in advance to present accurate information to your employees.
3. Circulate the Summary of Benefits and Coverage and the Uniform Glossary
Whether distributed by you or your health insurance carrier, these forms must be provided to employees regardless of whether your plan is grandfathered or ACA compliant. If coverage automatically renews for employees who don't take action during open enrollment, you'll need to get these forms to them at least 30 days before the start of the new plan year.
Open enrollment is your opportunity to showcase the benefits package you've worked so hard to develop to attract and retain your employees. Having a plan in place well in advance will help you remain compliant and help ensure that your employees are able to make informed decisions about their benefits for the coming year.
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