Every year, open enrollment allows employees to elect or change benefit options available through their employer, including healthcare benefits, life insurance, disability benefits and other voluntary or employee paid benefits. But the opportunity comes just once a year, so many employers wonder if employees have options after missing the deadline.
Typically, employers do not offer health insurance after open enrollment unless the employee has a qualifying life event that allows a special enrollment period.
For employer-sponsored group health plans, the open enrollment period varies. The window of time for your employees to make health insurance decisions may differ depending on your corporate calendar, your insurance broker and your health insurance provider.
In this post, we discuss an employer’s role in health insurance enrollment, whether employers can offer insurance after open enrollment, and what leads to special enrollment periods.
What is open enrollment?
Businesses with 50-plus employees that offer health benefits must hold an open enrollment period, according to the ACA. And most small employers also offer an open enrollment period.
Open enrollment is an annual window of time where employees can enroll in, change or cancel employee benefits elections.
During open enrollment, employees can view and make annual elections for insurance and benefit plans that your business offers, such as health, vision, dental, life and disability insurance plans. They can also make election and amount changes to health savings account (HSA) and flexible spending account (FSA) plans.
These changes could include switching health insurance plans, dropping certain types of coverage, adding dependents, or enrolling in benefits for the first time. Importantly, open enrollment allows your employees to consider the different available health plans you make available, with varying premiums, deductibles, copays and coverage limits.
Premium rates are reassessed at the renewal date and then reflected in open enrollment as well, with health plan options and prices often changing for the coming benefit year. You can work with your insurance broker or benefits provider to find better and budget friendly plans, or you can keep the plans you have. In addition, a broker will assist you with setting the appropriate employee premium contribution level.
Before and during enrollment, human resources teams should make sure employees know how much they will contribute to their plan each pay period. And, employees should be well aware of out-of-pocket expenses they may need to pay for healthcare. Your insurance broker or benefits provider can help determine what your employees need to know and educate them on health insurance options.
Open enrollment occurs once per year and typically lasts for a few weeks. Most businesses schedule open enrollment to end a few weeks before they must submit benefits forms to carriers. For calendar-year benefit plans starting Jan. 1, employers tend to hold open enrollment 30-60 days before the new year.
Can an employer pick when they have open enrollment?
Open enrollment for the ACA marketplace happens near the end of the year, but employer-sponsored plans can have different plan year dates and enrollment periods.
The period usually occurs in the fall, but employers have flexibility to schedule open enrollment and their plan year, so it does not necessarily have to correspond with ACA enrollment or the calendar year.
Open enrollment is also not required to be a certain length of time. However, most small employers have two- to four-week enrollment periods about one to three months prior to policy renewal. Coverage begins at a specified date after open enrollment and usually runs for a full year.
For the best service from your broker or insurance agent, you may want to plan your open enrollment period off-peak. For example, you could hold open enrollment in the spring for health insurance coverage that runs July 1 to June 30 next year. In addition, you will need to decide if the enrollment will be active or passive. An active enrollment is one where the employee must make a selection for each type of coverage versus passive includes a no change option.
Typically, this open enrollment period is the only time employees can enroll in health benefits or change their coverage.
Can employers offer health insurance after enrollment?
If an employee misses your company's health insurance open enrollment period and has not carried over their previous plan, they may not be able to do so until the following year.
Typically, employers cannot offer health insurance to employees outside of open enrollment. Once the business’s open enrollment window closes, employees usually have to wait a year to enroll or make changes.
Depending on the size of your business and how many employees are covered, you could be subject to ACA fines if your workers miss the open enrollment deadline. In addition, prior to ACA, IRS Section 125 requires an annual election for benefits that include pretax deductions.
Missing this deadline means your employees could be unable to acquire employer-run health insurance for a year, unless they sign a waiver stating they are covered under another plan, such as Medicaid. Exceptions are – for the most part – prohibited by the terms of the health insurance agreement. Companies typically have mandatory enrollment, even if it includes an employee declining coverage.
However, there are a few exceptions.
Most carriers allow a 30-day “grace period” after open enrollment to update selections.
If an employee is covered under another plan, but that coverage is lost, they can enroll in your plan immediately. Generally, employees have 30 days after they lose the other coverage.
Employees can enroll in your healthcare insurance plan when they are hired.
If an employee has a qualifying life event, it could trigger a special enrollment period (SEP) for them.
What are the factors that cause special enrollment periods?
Under specific life-changing circumstances, employees can enroll or change their benefits or insurance plans outside of open enrollment.
If an employee has a qualifying life event, they can be given more time to add, remove or cancel coverage through a special enrollment period. A special enrollment period is a window (usually 60 days) during which you can enroll in health insurance plans, even if it falls outside your company’s open enrollment period.
There are three main categories of qualifying events:
Loss of health coverage
Changes in household
Changes in residence
Loss of health coverage is a qualifying life event and can warrant a special enrollment period. Examples include losing existing health insurance coverage, losing Medicaid eligibility, or expiring COBRA coverage.
Qualifying life events involving changes in household and residence include (but are not limited to):
Having or adopting a child
Aging out of a parent’s health insurance plan.
A student moving to attend school.
Permanently moving somewhere with different insurance options.
Change household status that changes eligibility for tax credits.
A seasonal worker moving back from their place of work.
During special enrollment periods, employees generally have the same options as they would during open enrollment. If nothing triggers a special enrollment period, employees usually have to wait until the next open enrollment period to sign up for health insurance.
Working with a qualified insurance broker can help walk you through open enrollment to make sure nobody falls through the gaps or misses an enrollment opportunity.