A new study from HighRoads found that 71 percent of human resource executives prefer passive to active open enrollment periods, allowing employees to automatically renew their plans.
This came as a surprise to HighRoads executives, who think it's important for employees to take careful considerations when making plan decisions.
“On the face of it, passive enrollment is easier for both employees and employers, since employees can just 'roll over' their current elections (except for flexible spending accounts). But that can be a risky practice,” said Kim Buckey, SPD Practice Lead for HighRoads, in a statement. “If participants can renew their coverage without truly examining their elections, they may end up with coverage that doesn’t truly meet their needs, or that will cost them more than they can truly afford. It’s also becomes more critical that enrollment materials accurately describe benefits (and any changes to them)—and that SPDs [summary plan descriptions] are updated promptly to reflect that information.”
Active enrollment requires employees to make a proactive plan choice each open enrollment period. It encourages employees to take a look at their SPDs and review any plan changes. Employees who don’t take action are penalized- typically by a default enrollment in either the option with the most basic coverage, or to no coverage at all.
However, getting employees to read annual enrollment materials is still a challenge. The survey shows 65 percent of the employers are using a variety of tactics to reach employees, including snail mail, email, and face-to-face communication.
To encourage readership, employers are stepping up their packaging of enrollment materials. The majority of respondents — 62 percent — are branding their enrollment material.
“Employers want to deliver messages relating to the value of the benefits they provide and the need for employees to make informed decisions," Buckey said. "Branding serves as a recognizable sign of commitment and expectation. It’s a focused message to employees that explains why their company is the preferable place of employment."
HighRoads also found employees are overwhelmingly using electronic submissions to make their open enrollment choices. Seventy-three percent of the respondents said employees submit enrollments electronically, while only 13 percent of respondents use paper exclusively as an enrollment method. For the most part, these are smaller employers with fewer than 5,000 employees.
The HighRoads survey also looked at open enrollment preparation lead times on the part of employers. It found that 59 percent of respondents start three to seven months ahead in developing open enrollment content while another 41 percent begin the process eight months to a year ahead.
“Open enrollment isn’t getting easier for HR executives. It’s getting tougher and more complex every year, as more and more legislation requires plan design changes and new administrative procedures,” Buckey said.
For the most part, larger employers with more than 5,000 employees are taking the longest lead time – eight months to a year – to prepare for open enrollment. Sixty percent of surveyed companies in the 100,000 and up employee range said they took eight to 11 months to prepare. In the smaller company category – fewer than 5,000 employees – 74 percent said they started to prepare three to seven months ahead.
Despite the increased complexity of health benefits plans and regulations, HighRoads found most respondents appear to be tackling open enrollment in house. Approximately 63 percent indicated that they do not use an enrollment company or a vendor to support enrollment functions.
Working on enrollment is a significant time commitment, with 97 percent of respondents reporting that open enrollment consumes at least 50 percent of their time. Not surprisingly, 41 percent of respondents indicated that time constraints are the biggest challenge in preparing for open enrollment. Cost and drafting content account for 47 percent of respondents’ challenges.
HighRoads conducted the open enrollment survey to gauge how employers plan, execute, and deliver open enrollment communication materials to employees. Respondents ranged in size from fewer than 5,000 employees to more than 100,000 employees. The majority of respondents have more than 5,000 employees.