Open Enrollment: Preparing Your Employees To Make Informed Decisions
Making the right enrollment decision is important – and employees only have one chance per year.
What is Open Enrollment?
Once a year – during open enrollment, employees can sign on to health insurance, make changes to their health insurance or stop their health insurance plan. The only other time an employee would be able to make an enrollment change is if they have a qualifying event, such as a child aging off their parent’s plan (26 years old), marriage (you can add a spouse to the plan), have a child (add the child to a plan), or get divorced. A list of full qualifying events are listed here.
High vs. Low Cost – High Deductible Plans
Most people decide what health insurance plan to enroll in based on the total deducted from their paycheck. For about 80 percent of eligible employees, this can be a decent strategy – the cheaper the plan the better. The rule of thumb is that 80 percent of claims comes from 20 percent of employees enrolled, therefore 80 percent of the employees that are low users of the health insurance typically do not need high-cost benefits. “High-cost” meaning high premium, which usually is associated with lower out of pocket responsibilities (i.e., the plan pays for more).
Getting employees on the proper plan can sometimes be a struggle. Many just reenroll with the same coverage as the previous year without thinking twice. For employees like the low user, companies can use incentives to make a less expensive plan look more attractive by contributing funds to their HSA plan, therefore covering some of their qualified expenses.
For the 20 percent of employees that are moderate, regular, or high users of the health insurance, a mid-deductible and/or low deductible option should be available. Depending on the size of the company, employers can offer a low and a mid-deductible option (typically a $1,000 and a $2,500-$3,000 option). The lowest deductible can be a Preferred Provider Organization (PPO) plan or a narrower network (HMO, EPO, etc.) and the mid-deductible could be a PPO or HSA depending on the deductible level. These options are referred to as silver, gold or platinum plans depending on the richness of benefits.
Employee Education and Support
The process of choosing the right plan can be confusing – especially for first time enrollees – or when there are changes to plan options. Having a team of advisors or staff assist with open enrollment open is important as employees may need guidance to make the right decision. The most common question asked is: “What is my total cost of healthcare?”
Additional questions include:
- If I choose a cheaper premium option, will I have too much out of pocket expense?
- If I choose the more expensive option, will my payroll deductions outweigh the cap on my out-of-pocket liability?
All these questions can be answered through group meetings and one-on-one sessions during the open enrollment period. A partnership with your insurance broker is important to employers when designing the right plans for employees – but also important for employees – to provide the service and support they need.
At Oswald, our team comes on-site to meet with employees over the course of 1-3 days (usually) to make sure everyone is comfortable with their decisions and educated throughout the process.
For more information, please visit our Employee Benefits page or contact me directly:
Business Development Leader
Note: This communication is for informational purposes only. Although every reasonable effort is made to present current and accurate information, Oswald makes no guarantees of any kind and cannot be held liable for any outdated or incorrect information. View our communications policy.