Most U.S. Employers Opt for ‘Passive’ Open Enrollment
A large majority (71 percent) of U.S. employers conduct passive rather than active benefit enrollment practices, enabling employees to renew most of their plans automatically, according to a 2011 survey by HighRoads, a provider of benefit plan communication services.
Respondents ranged in size from U.S. organizations with fewer than 5,000 employees to those with more than 100,000 employees, although most respondents had more than 5,000 employees.
“On the face of it, passive enrollment is easier for both employees and employers, since employees can just ‘roll over’ their current elections—except for flexible spending accounts,” said Kim Buckey, summary plan description (SPD) practice lead at HighRoads. “But that can be a risky practice,” she added. “If participants can renew their coverage without examining their elections, they may end up with coverage that doesn’t truly meet their needs or that will cost them more than they can truly afford. It also becomes more critical that enrollment materials accurately describe benefits and any changes to them—and that SPDs are updated promptly to reflect that information.”
Active enrollment requires employees to make a proactive plan choice each open enrollment period, which makes it more likely that they will review any plan changes. Employees who don’t take action are penalized—typically by a default enrollment into the option with the most basic coverage or to no coverage.
“It is critical that employees carefully review their plan open enrollment materials each year, particularly in light of health care reform and changes their employers are making to be in compliance,” said Mary Andersen, founder of ERISA Diagnostics Inc., a benefits consulting firm. “Those changes might be additional coverage possibilities, such as covering children up to age 26, or it could be new limits in coverage related to spending accounts. Either way, employees need to understand their options and take responsibility for their own benefit choices.”