What should your open enrollment look like?
With open enrollment just around the corner, do you have a good strategy ready for your employees and their benefits? The last year has brought major changes to the benefits administration industry and, with open enrollment being the busiest time of the year for human resources and benefits professionals, not having a solid plan moving forward can bring countless employee woes and missed opportunity. Conversely, a great employee enrollment experience reflects positively on your company’s image.
In this post, we’ll be comparing active and passive open enrollment strategies to help you make the best decision for your organization.
What is Active Enrollment?
Active enrollment is a benefits enrollment strategy where every employee is required to participate, ensuring employees review and select benefits that best fit their present needs. Employees must actively participate in the process.
However, this means that there is an upfront time investment every enrollment period looming over your benefits department to ensure that information is clearly communicated with your employees. In 2019, a new survey through JP Griffin revealed that 50% of U.S. employers were participating in active enrollments, a stark difference from 2011’s study that reported 29% of employers were using active strategies.
Why the shift toward active enrollment in the last few years? That’s because more and more employers are discovering the massive advantages that come with active strategies!
Active Enrollment: Pros and Cons
Pros:
- The active enrollment strategy forces employees to review and consider their benefit elections for the new enrollment period, ensuring they get the benefits that they need.
- Active enrollment grants employers the ability to better educate their employees on their benefits and inform them of new opportunities available for their coverage plans.
- When you require each and every employee go through their coverage options, you are actively documenting your ACA compliance.
- Employees that participate in active enrollment are three to five times more likely to enroll in voluntary benefits.
- An active enrollment strategy allows companies to show how much they value their employees through a carefully curated benefits enrollment process, boosting employee retention and productivity.
Cons:
- Employees that do not make their benefit elections during active open enrollment may lose coverage for that year and will not have a full understanding of benefit options available to them.
- Depending on how active enrollments are conducted, more employee participation may lead to higher employer costs.
- An active enrollment takes time and effort to pull off successfully. This can be stressful for time-challenged benefits departments.
What is Passive Enrollment?
Passive enrollment is a benefits enrollment strategy that’s straightforward. Every enrollment period, each employee’s benefit elections roll over into the next automatically. It’s a hands-off migration process, cutting the administrative workload.
If we look back to a study conducted in 2011, it’s clear that passive enrollment was a popular choice with employers as almost 71% of U.S. employers chose to conduct them. However, more robust data has been published in recent years suggesting employer’s do otherwise. Let’s look at the pros and cons.
Passive Enrollment: Pros and Cons
Pros:
- Passive enrollment is an easy, automatic enrollment style that saves time. Human resources and benefit professionals have reduced administrative burdens compared to active enrollment strategies.
- Employees that neglect to participate don’t miss out as they are automatically enrolled in their selections from the previous year.
Cons:
- Without having an active role in pushing open enrollment to your employees, your company may face retention and productivity consequences. If your employees lack a clear, up-to-date understanding of their benefit options then they may not be electing options that best fit their present situations, leading to some unintentional backlash toward your benefits department.
- Employees are more likely to neglect their coverage during passive enrollment. Many won’t consider making changes or updates to their coverage, even if new benefit options are made available to them.
- A passive enrollment strategy may lead to compliance issues if employee personal data isn’t being kept up-to-date.
So Which Strategy Should You Use?
While a passive open enrollment strategy guarantees an easier process for your company, an active enrollment strategy is too big of an opportunity for most companies to miss. Active enrollments remind and educate your employees on what is available to them.
Many employees forget their benefit elections from the previous year. When your company holds an active open enrollment, employees are directly called upon to address their benefit elections and current needs.
When choosing an active or passive enrollment strategy, it makes sense to weigh the time savings benefits of a passive enrollment strategy with the cultural and practical benefits of an active enrollment strategy.