What is open enrollment?
Open enrollment is the time of year when individuals and families can enroll in a health insurance plan for the next calendar year. This is the only time each year when current employees can make changes to their health insurance policy, unless they have a major life change (often called a qualifying life event or QLE). The other exception to open enrollment involves new employees. New hires can enroll in an insurance plan after being hired, but once they enroll, they cannot make changes until the next company open enrollment period.
Most companies schedule open enrollment near the end of the calendar year, such as in November, and give employees the opportunity to modify other benefits at the same time. However, you can schedule it anytime that complies with your insurance provider's requirements. It is a good idea to include the open enrollment dates in your Employee Handbook.
Insurance companies generally require policy changes to be submitted by a certain date, so employers often schedule their open enrollment period to meet that deadline early. Most employers schedule the open enrollment period for four weeks to give employees enough time to make their selections.
Are employers required to have an open enrollment period?
Under the Patient Protection and Affordable Care Act, employers of 50 or more employees are legally required to have an open enrollment period. Many smaller employers may also be required to hold open enrollment as a condition of their agreement with their health insurance provider or due to local laws.
If you provide health insurance to your employees, you may be able to contact your provider's benefits representative to help you determine if open enrollment must be offered, and what else you may need to do based on your health insurance coverage contract.
If you are an employer that does not offer health insurance, it can be helpful to provide your employees with information about the available health insurance programs in their area and how they can enroll.
How do small businesses start providing health benefits?
The best way to start providing health insurance benefits is to simply start researching and asking questions to learn about your options. Health insurance companies have an array of resources you can use to compare plans and find the best fit for your company. If you have 50 or fewer employees, the SHOP program through HealthCare.gov has options specially tailored to fit small business needs.
Some providers offer plans that are fully funded, which means the plan is sponsored by the health insurance carrier rather than the employer. The benefit of this type of plan is that the fees are predictable, but they are often more expensive than a self-funded plan. In contrast, the employer can sponsor a self-funded plan. That means, as an employer, you pay your employees' claims as they come in. Self-funded plans require a lot more administration, but can sometimes be the right choice depending on the business. Before selecting a self-funded plan, it may be wise to consult an attorney due to the complexity and increased financial unpredictability of these plans.
What happens if a business or employee misses open enrollment?
An employee who misses open enrollment might not be able to change their health insurance unless they have a qualifying life event. Most insurance providers, however, allow a 30-day grace period after open enrollment to let employees update their choices. If employees act quickly, they might be able to take advantage of this grace period.
Open enrollment periods are generally required under the Patient Protection and Affordable Care Act for employers who, on average, have at least 50 full-time employees. If an employer misses open enrollment, the insurance provider may impose certain consequences based on its contract with the employer. There may be tax consequences, penalties, or other legal problems that arise in the employment context as well.
Is it legal to auto-enroll employees if they forget to enroll?
Yes. Employers can auto-enroll employees if they do not choose an insurance plan. However, employers may have to meet very specific requirements for automatic enrollment. For example, enrollment may have to be for the lowest-cost medical plan. They may also have to provide certain notices about the automatic enrollment process, let employees decline coverage, and tell employees when they can choose a different option.
Automatic enrollment policies are not required, so small employers may want to avoid them unless there is a compelling reason to use this type of policy, such as a local labor law requiring employers to provide health benefits. Insurance providers may be able to directly provide employees with information about their plans and auto-enrollment details, or they may have forms that an employer can provide to their employees.
Can an employee cancel enrollment?
Although employees can only enroll or make changes at certain times, employees can usually cancel their health insurance coverage at any time. In most cases, employees are not limited to only canceling insurance coverage during open enrollment. It is often as easy as calling the insurance provider, asking to cancel, then completing a form they provide. However, employees may want to cancel during open enrollment if they plan to add new insurance coverage from another source at the same time.
Does open enrollment apply to self-employed people?
When you hear the term open enrollment, you might think of employees rather than the self-employed. However, open enrollment affects the self-employed and business owners, too.
One way for people who run their own businesses to get health insurance is through the Individual Health Insurance Marketplace. The Marketplace is a U.S. government program and has an open enrollment period just like health insurance offered by employers.
If you are self-employed, you might qualify for other health insurance options, such as Medicaid and CHIP. These and other state-based programs also include open enrollment periods.
The Marketplace is available only for self-employed workers. The government does not consider you self-employed if you have employees. Instead, it considers you a "small employer." Small employers can get health insurance for their employees through the SHOP Marketplace for small businesses. Those plans also have open enrollment periods.
If you have more questions about open enrollment and what you may need to do as an employer or self-employed worker, reach out to a Rocket Lawyer network attorney for advice about your specific situation.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
