Each year, employees have the opportunity to sign up for, cancel, or modify their health insurance and other workplace benefits such as disability and life insurance plans. In the U.S., this brief period is known as open enrollment. Open enrollment is typically scheduled in the fall and all plan decisions take effect the following calendar year. Most employers have an open enrollment period of between two to four weeks. This article will explain the difference between active and passive enrollment communication.
It is not always enough to simply notify your employees of an upcoming open enrollment period. Sometimes, it is necessary to open up a dialogue with workers to ensure that they fully understand their options and terms of the plans being offered. Benefits can change annually, so employees should always take the time to review written or digital materials and ask questions if needed.
Due to the importance of open enrollment, many employers choose to approach employee benefits with either active or passive enrollment communication. Here is a closer look at these types of communication and the pros and cons of each.
Active Enrollment Communication
As employee benefits become more expansive and complex, more and more employers are choosing active enrollment communication. Unlike passive enrollments, which allow employees to continue with the same benefit elections as the year prior, active enrollment requires workers to evaluate plan options before choosing a benefits plan. This can be especially useful in enrollment years when there are major plan changes or additions that could affect cost and other terms.
Communication is of the utmost importance during open enrollment. Your employees need to understand what is expected of them and what could happen if they fail to make an active election. For example, some employers may drop coverage. It may be necessary to start preparing for open enrollment months ahead of time to ensure that you have the means necessary to reach your workforce.
If you have a large population to reach, enlisting outside communications can be invaluable. Consider having enrollment vendors and brokers assist with communications.
- Active enrollment forces employees to carefully review and choose benefits at least once a year. This helps ensure that workers are receiving the benefits they need based on their current situation.
- Active enrollment provides employers with the opportunity to better educate their workforce on new benefits available and possible plan changes.
- Active enrollment encourages employees to drop benefits that they may no longer need and only keep the ones that they are actually benefiting from.
- Active enrollment gives employers the resources needed to improve employee data, such as emergency contact information and eligible dependents.
- Active enrollment ensures that certain benefits that cannot be treated passively are not simply overlooked, such as Flexible Spending Accounts (FSAs).
- The amount of information involved in active enrollment can be overwhelming to some employees.
- Active enrollment communication can be difficult to achieve without help from outside third parties.
Passive Enrollment Communication
The majority of employers who implement passive enrollment do so because it is the easier option. With passive open enrollment, employees are automatically re-enrolled based on their previous benefit elections. Not only is this the easiest option, but it also reduces the administrative burden.
Passive enrollment also helps ensure that employees do not lose their benefits when a new calendar year begins simply because they forgot to re-enroll during the open enrollment period. This type of situation can be quite stressful on both employees who lose their benefits, as well as HR professionals who may have to deal with employees who may be angry or upset.
With passive enrollment, employees simply need to check a box that says that they would like to keep the same benefits they had before. For the majority of employees, this is the preferred option because it reduces complications for both workers and employers. However, just because it is the easier route does not mean it is always the best one.
Passive enrollment can also result in problems, especially when it comes to employee satisfaction and employer costs. Before choosing passive enrollment for the simplicity alone, consider both the pros and cons.
- Passive enrollment is far more convenient and requires considerably less administrative work to complete.
- Passive enrollment helps ensure that employees do not lose their benefits by forgetting or overlooking the open enrollment period.
- Passive enrollment helps reduce HR’s burden and reduces the time spent on phone calls, emails, and unexpected office drop-ins.
- Passive enrollment allows employers the chance to update important employee data, including information on dependents.
- Employees do not always make informed decisions when it comes to their benefits, especially when they do not understand the various plans available to them.
- Employee benefits can be complicated, and if employees are not educated about their choices, it could result in poor employee health, missed work, and other issues.
Which Communication Strategy Is Best?
Active and passive enrollment communication are different in many ways, and what might work for one company may not work well for yours. It is important to consider how involved you want to be in employee benefits. According to a survey conducted by HighRoads, approximately 71 percent of U.S. employers choose passive enrollment practices over active enrollment.
While there is no right or wrong option, you will want to think carefully about what option would benefit your employees the most.
Learn More About Enrollment Communication
One of the biggest decisions you will have to make when rolling out an employee benefits plan is whether you want to engage in active or passive enrollment communication. Understand that both options can bring benefits to the table, as well as some drawbacks. In some cases, a business may benefit from having a mix of both active and passive enrollment communication to obtain the best of both worlds.
If you are having difficulty choosing the best option for your company, reach out to a benefits consultant who can guide you in the right direction. For more information about open enrollment communication strategies, contact the Business Benefits Group.