Quick Look: While all months are critical for businesses, the autumn months of September, October, and November are especially important for many employers and their employees. This is the annual period when benefits open enrollment (OE) occurs and employees can change their benefits, research options, and pick the plan that’s right for them. Here we’ll look at five common pitfalls to avoid during this time and discuss how a professional employer organization (PEO) can simplify the process.
Health insurance is confusing and selecting the right benefits plan during open enrollment can be a frustrating process for employees. Between trying to understand insurance jargon and acronyms, navigating multiple plan options, sticking to tight deadlines, or debating whether to enroll in voluntary benefits, it’s easy to feel overwhelmed and choose a plan that isn’t quite right. And one wrong misstep or oversight could result in unnecessary costs and a whole lot of headaches.
As we head further into open enrollment season, here are five common mistakes to avoid and how working with a professional employer organization (PEO) can make the process a whole lot easier.
What is open enrollment?
Open enrollment is the annual period in the fall when eligible individuals can enroll in or change their benefits for the next calendar year. While it’s often associated with health insurance, the open enrollment period may also apply to other benefits like retirement savings plans or life insurance. During this time, rates are usually reassessed, and employees can opt in or out of plans or make changes to current plans.
Although OE may only run for a few weeks or months, employees can amend certain benefits throughout the year during qualifying life events. Qualifying life events are certain circumstances that change an employee’s status for health benefits, including:
- Getting married or divorced
- Having a baby
- Adopting a child
- Turning 26 and being dropped from a parent’s coverage
- Moving residencies
In today’s competitive talent market, offering a strong employee benefits package with top-tier health insurance is more important than ever. According to Mercer’s Survey on Health and Benefit Strategies for 2023, over 2/3 of employers will enhance health and benefits offerings in 2023 to improve attraction and retention or better meet employee needs. Additionally, a 2022 MetLife study revealed that almost half of employees at small organizations and more than half at mid-sized employers are willing to pay more for benefits that meet their needs.
1. Failure to communicate
Adequately offering benefits communication and education prior to and during OE can help ease confusion. The first step is to provide as much information as possible through multiple channels. Using different formats such as webinars, email, one-on-one appointments with the HR Managers at your PEO, videos, and social media can reach more and potentially geographically dispersed employees. And communication is key – 1/3 of workers say benefits are as important to them as salary, yet nearly double that don’t feel they can turn to their employers with benefit-related questions.
It’s also important to note that under the Affordable Care Act (ACA), all employers subject to the Fair Labor Standards Act are required to communicate with employees about their health insurance and coverage, regardless of whether they offer benefits or not.
And while open enrollment is the obvious time to communicate with employees about healthcare options, a helpful idea is to provide ongoing education and resources throughout the year. The short renewal period may leave employees feeling anxious or rushing to make a decision, which may result in choosing the wrong plan.
2. Missing the deadline
The 2023 benefits open enrollment period in most states begins November 1, 2022. In New Jersey for example, open enrollment lasts from November 1 to January 31. It can be extremely difficult to sign up for health insurance beyond the designated timeframe (unless of course, you experience a qualifying life event). Missing the open enrollment deadline not only means a loss of coverage for an employee and potentially their loved ones, but they may also be subject to a fine under the ACA.
Even with continuous communication, some employees may miss the open enrollment period. Encourage proactiveness and mark deadlines on your company intranet or calendar and send regular communication and reminders. If an employee does happen to miss the deadline, be sure to talk to the HR Manager at your PEO company right away to discuss options and elections for the next year.
3. Defaulting to last year’s plan
One of the most common mistakes an employee makes is failing to review their benefits and insurance usage from the previous year. Often, the HR and benefits experts at a PEO work to create tailored health plans which speak to the specific needs of your workforce, only to have employees default to last year’s plan. People tend to stick with what they know, even if a change would do them good.
Suggest that workers review their yearly medical expenses and any planned changes in the coming year, like having a new baby or undergoing surgery. This is a great time to evaluate whether to add additional coverage or waive certain plans if necessary. Then, ensure they schedule a time to meet with their HR Manager to review their options. Some PEOs, like ExtensisHR, provide a dedicated resource to answer benefit-related questions and help your employees choose the ideal plan to best meet their needs.
4. Over- or under-insuring
Employers who work with a PEO are usually able to offer a few different plan options… but bigger isn’t always better and the cheapest premium isn’t always the most cost-effective. It’s important for an employee to assess their healthcare spending over the last few years to determine how much coverage may be needed for the upcoming year.
For example, a healthy 25-year-old employee who tends to undershoot their deductible may benefit from moving to a high-deductible plan. A basic high-deductible plan generally has the lowest monthly premium but requires the policyholder to spend more money before full coverage kicks in (which means higher out-of-pocket costs). High-deductible plans may also be coupled with a tax-advantaged health savings account (HSA) to help pay for qualified medical expenses. Conversely, an employee who usually hits their deductible early in the year might consider paying a higher premium for more coverage.
Of course, past medical spending is only helpful to a point. Again, if an employee is planning to start a family, or know they have an upcoming surgery, it might be a good time to opt for a heartier plan. This is also a great time to evaluate whether to enroll in voluntary benefits or supplemental insurance like pet coverage, legal protection, and tuition reimbursement.
5. Neglecting technology
The use of new technology is one of the most significant innovations to come out of a post-COVID world. More people than ever work remotely or on a hybrid schedule, so the days of strictly in-person benefits communication are out. To accommodate this new way of work, employers should ensure benefit renewal meetings and messaging are accessible for all employees through multiple channels. This could include virtual seminars, sending monthly newsletters via email, and hosting all information in an online portal where people can check their current plans and view all new options.
This is especially important as younger people enter the workforce. Gen Z employees are technology savvy, having never grown up in a world without social media or the Internet. Similarly, millennials, who currently make up the largest part of the U.S. workforce, have repeatedly expressed a preference for receiving benefits information virtually. Luckily, many PEOs invest in HRIS technology so their customers don’t have to. ExtensisHR, for example, helps to streamline the OE process with its Work Anywhere® technology platform and mobile app, allowing employees to review and enroll in their benefits right from their phones or tablets.
Partner up for open enrollment
Health insurance costs continue to rise each year. According to new research from Willis Towers Watson, employer-sponsored benefit costs are expected to increase by 8.1% on average globally for 2022. Open enrollment is a time for reevaluation, and this is where working with a PEO can level the playing field. Under the co-employment relationship, businesses fold under the PEO’s large group plan, giving SMBs access to plans (often at much better prices) that they typically wouldn’t be able to obtain on their own.
Partnering with a PEO like ExtensisHR can also save business leaders a massive amount of time, research, and administration. With a PEO, SMBs receive dedicated support from HR Managers to help employees choose the best plan for their needs and answer any benefit-related questions.
Choosing a new health insurance plan can feel overwhelming, but avoiding a few common mistakes and working with the benefits experts at PEO can make the process a lot less daunting.
Open enrollment is a time for reassessing and to think about HR outsourcing a little differently. Our experts are here to help you evaluate your benefit plan to ensure you’re offering the right mix of products to address your employees’ changing needs. Contact us today.