Open Enrollment Best Practices
As we approach the labor day holiday, human resources officials, brokers, consultants, and others begin to think not as much about the end of summer, but rather, the approaching OPEN ENROLLMENT SEASON! Before we know it, that special time of the year will be upon us. Having been involved with so many open enrollments over the years, as an insurance company executive, third party administrator, wholesaler, consultant, and retailer/broker, I have accumulated some insight as to what employees/enrollees should be considering during this important time of the year. Call these my “open enrollment best practices”, or, put another way, the things enrollees/employees should consider as they enter open enrollment season…
- When reviewing health insurance options (and for that matter, dental, vision, life insurance, etc.), always annualize the premium amounts presented/offered. Most of the time, the employee/enrollee is going to be enrolled for a full, 12 month period, so it just makes sense to look at financial responsibility on an annual basis. Plus, plan related deductibles and out of pocket accumulations generally refresh after a period of 12 months.
- Consider ALL available health insurance options. It might turn out that coverage offered by a particular employer to a particular employee may not be the best option. There are other options worthy of consideration, such as:
- – Spouse’s employer plan
- – Medicare (with associated supplemental coverage(s)/Medicare Advantage
- – Individual coverage purchased on the private market
- – Individual coverage purchased on the public exchange/marketplace
- – Veteran’s Administration
- – Tricare
- Don’t just focus on one aspect of the coverage (e.g., copays for office visits, the deductible, the coinsurance percentage, etc.). Rather, tally up the entire OUT OF POCKET expense of the option(s), and consider the plan(s) that make the most sense for the individual and/or families health care needs. If the individual/family uses little to no health care services, the plan offering with the lowest premium makes more sense. Alternatively, the individual/family that uses a fair amount of health care services should consider the plan with the lowest potential out of pocket limit. Ask if there’s a decision support tool available which helps employees make a more informed decision of coverage based on their historical use of health care services.
- Take into account the offering of dollars to be used for health care expenses that insurance doesn’t cover, or for use meeting deductible/copay/coinsurance obligations. Sometimes employers offer/fund/provide dollars in multiple spending arrangements. These usually end in the letter “A”, as in HSA…FSA…HRA.
- Inquire into stipends and assessments that may apply, based on enrollment decisions. Some employers offer an opt-out or waiver stipend (either post tax, or tax-free through a Flex plan) if an employee opts to waive the coverage offered. On the flip side, some employers require an assessment (in addition to the premium cost share) for covering a spouse who has coverage available through their employer. These additional amounts of dollars are significant factors in making open enrollment decisions.
- If a wellness incentive is offered, it’s very important to understand what the requirements are, in addition to the associated rewards/penalties. There are a myriad different wellness programs being offered, with untold ways of incentivizing (or penalizing!) employees. Some wellness programs require very little, yet yield a high reward (e.g., premium reduction, HSA contribution, cash reward, etc.). Others require much, yet provide a marginally small incentive.
- Many employers offer their employees the opportunity to pay their portion of the premium for health, dental, and vision coverage with pre-tax dollars through a Flex plan (sometimes called a “section 125 plan”, or a “cafeteria plan”). This is a great way for employees to reduce their tax obligation, but enrollees need to know that if they take advantage of this offer, they are committed to remaining enrolled in the plans they are paying for with pre-tax dollars, for the entire 12 month period of the Flex plan. The only way to dis-enroll earlier is to experience a qualifying event.
- Speaking of Flex plans (and previously, HSA (health savings account) and HRA (health reimbursement arrangement)), these arrangements/accounts offer enrollees outstanding tax benefits, along with the means to pay for lower cost health care. Employees/enrollees should consider the use of tax preferred dollars available to them in one or more of these “A’s”, and take full advantage. Many times I see employees offered both an HSA and a Limited Purpose FSA, and either or both are completely ignored…BY HIGH UTILIZERS!
Have a wonderful Labor Day Holiday…and an even better OPEN ENROLLMENT SEASON!