Benefits enrollment: A guide for employers

An effective benefits package is crucial for attracting and retaining top talent. However, the open enrollment period can be challenging for HR teams and confusing for employees. Employers need the right preparation and strategy to streamline this process, reduce stress and help employees make well-informed decisions for their families.

What is benefits enrollment?

Benefits enrollment is a designated time when eligible employees may elect to participate in employer-sponsored benefits for the upcoming plan year. New employees can elect benefits as allowed by the plan when first hired, while current employees can review and modify their selections from the previous plan year.

How does open enrollment work?

Formerly a paper-driven process, open enrollment has transitioned to online platforms. Once logged in to the system, employees may be able to take the following actions for an upcoming plan year:

• Enroll for health, dental, vision, retirement savings and other benefits
• Choose coverage levels, such as individual or family
• Select a plan type, e.g., health maintenance organization (HMO), preferred provider organization (PPO), high deductible health plan (HDHP), etc.
• Adjust contributions to retirement savings accounts, flexible spending accounts (FSA), health savings accounts (HSA), dependent flexible spending accounts (DFSA), etc.
• Add or remove dependents and beneficiaries
• Enroll in supplemental health plans and wellness programs, such as life insurance, disability, critical illness, etc.

When is open enrollment?

Open enrollment is typically held in November for calendar-year benefits that take effect in January. This schedule gives employers time to submit enrollment forms to benefits providers by the required due date.

Once the benefits enrollment period ends, employees generally cannot sign up for benefits or change their selections. However, there are exceptions for new hires and existing employees who experience certain qualifying life events, such as marriage or the birth of a child.

Essential employee benefits

Getting the necessities right is foundational to building a benefits program that workers love. Many employees consider some or all of the following benefits essential:

1. Medical, dental, vision, life and disability insurance
2. Retirement savings plans, including a 401(k) match
3. FSAs and HSAs
4. Wellness benefits

Tips to improve the benefit open enrollment process

During open enrollment, employees often need help to fully understand the benefits choices available to them and the deadlines. Employers can address these challenges by enhancing communication strategies, leveraging decision-support tools, and using performance metrics.

Impactful benefits communications

If employees don’t understand the benefits offered by their employer, it can significantly impact their elections. That’s why benefits-related communications must be effectively planned and executed before, during and after open enrollment. Here’s how:

• Create a communications plan that outlines goals, target audiences, tactics and deliverables.
• Identify all stakeholders impacted by the communications plan, including job candidates, new hires, long-term employees, supervisors, executive leaders, etc.
• Avoid using technical language, minimize abbreviations and communicate simply to help employees understand the current offerings.
• Make benefits information as easy to consume as possible using visuals, bulleted lists, headings, checklists and videos.
• Personalize messaging to reach employees of various backgrounds and with varying needs.
• Make communications more relatable to employees by focusing on what’s in it for them, e.g., physical, mental and financial well-being.
• Promote benefits using a variety of channels, including digital mediums and print.
• Ask employees for feedback, taking special note of learning styles and preferences, and use it to refine benefits communications yearly.

Personalized decision support

Personalized decision-support tools can help employees make more intelligent benefits decisions and exert greater control over their selections. Some features to look for include:

• An online benefits enrollment process that guides employees through benefits decision-making and helps them select their benefits quickly
• Benefits recommendations that list the best options for employees and their dependents
• A convenient employee experience integrated with top insurance carriers and benefits administrators that lets employees easily navigate between benefits recommendations, elections, cost transparency tools and claims information
• Investment support capabilities, such as 401(k) and HSA calculators, which can help employees better prepare for retirement and unexpected medical expenses
• Educational resources that reduce HR’s administrative burden and empower employees to make intelligent decisions

Understanding how benefits are performing

Analytics are game changers for modern benefits administration systems. They can help employers answer critical benefits questions, such as:

• How are employees migrating between benefits plans?
• How are employees changing their medical coverage levels?
• What is enrollment by benefits category?
• How is benefits enrollment trending over time?
• Which new hires are almost out of time to complete enrollment?

Additional metrics – enrollment portal engagement, mobile adoption and call center usage – can provide insight into how employees experience, interact with and think about the benefits program. These data points constitute valuable intelligence employers can use to improve their programs.

Frequently asked questions about benefits enrollment

What is open enrollment for benefits?

Open enrollment is when eligible employees can select or modify their health coverage, retirement savings plan and any other employer-sponsored benefits.

When is the benefits open enrollment period for most companies?

If benefits are effective January 1, enrollment season commonly occurs in November. Employees can enroll in benefits or make changes at other times of the year only if they are new hires or experience a qualifying life event.

How long does open enrollment have to be?

Employers generally are free to dictate the length of open enrollment. A period of two to four weeks is most common.

Are employers required to notify employees of open enrollment?

Employers who sponsor health insurance have notice and disclosure obligations. Examples include the Summary of Benefits and Coverage (SBC) and the Notice of Health Insurance Portability and Accountability Act (HIPAA) Special Enrollment Rights. Managing notification requirements can be complex, and failure to comply can result in financial penalties.

Is open enrollment required by law?

Employers subject to the Affordable Care Act (ACA) may be required to have an open enrollment period. These businesses must offer affordable health insurance with minimum essential coverage and minimum value to at least 95% of their full-time employees, including dependents.

How long do new hires have to enroll in benefits?

Open enrollment terms for new hires vary by employer. Some businesses require employees to work 90 days before they are eligible for benefits, after which they may have a few weeks to enroll.

What is passive vs active benefits enrollment?

Passive benefits enrollment means employees must only opt into a benefits program once. Their selections automatically carry over from year to year unless they modify them or opt out. Active benefits enrollment requires employees to opt into the program annually or risk losing coverage.

This article is intended to be used as a starting point in analyzing employee benefits plan enrollment and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.