How HR Can Help Employees Make Smart Decisions During the Open Enrollment Period
For most employees using their employer’s benefits plans, fall marks the beginning of the open enrollment period, during which they can make changes to their health insurance coverage and other benefits. However, according to research from Aflac, about 90 percent of all employees do not carefully review their options and make changes, and most people spend less than 15 minutes making their selections and filling out the paperwork. In fact, about a quarter of all employees spend less than five minutes considering their health coverage options.
With the advent of the Affordable Care Act, though, employees may want to rethink that strategy. Changes to how health insurance is sold, policy coverages, and rules regarding flexible accounts have most likely significantly changed the available options, and if an employee does not make the right selections now, he or she could wind up paying a lot more for their health insurance in 2015.
So what can HR do? Communication is important during open enrollment, and HR can help people make the right choices with a comprehensive communication and action plan.
Communication Priority 1: Explain the Exchanges
In the past, most employees relied upon their employers to do the health insurance shopping for them, and chose their plan from a pre-determined array of options offered by a single carrier. However, the new health insurance exchanges provide more options, and some employees may find that they will pay less for their coverage by purchasing insurance on the exchange. In fact, studies show that many employers are not shopping for employee coverage at all, and are instead providing subsidies for employees to shop for their own coverage on the exchanges.
In either case, employees should be prompted to spend some time exploring their options and weighing the costs and benefits of multiple plans. It’s important to note that employees who are eligible for employer-sponsored health insurance who opt for the public exchange instead will not be eligible for any government subsidies, but if the overall premium cost is equal to or less than the premium for the employer-sponsored coverage, that may not be a factor.
Many employees, especially those who are younger or who earn lower wages, look at their monthly premium first and choose the least expensive option without carefully considering what each policy covers. For a relatively healthy individual who needs basic primary care, a lower priced, higher deductible plan may work. For someone with chronic conditions or a family, though, a plan with a slightly higher monthly cost may prove to be a better value, if it provides better coverage. Benefits administrators need to communicate the value of each plan option and specific coverages to help guide employees to the best choice.
Communication Priority 3: Flexible Spending Accounts
One of the provisions of the Affordable Care Act was a major change to Flexible Spending Accounts (FSA). Under the new rules, individuals can only defer up to $2,500 a year into a FSA, which must then be used to cover qualified health care expenses. Employees need to understand that such accounts are “use it or lose it” propositions — money left over at the end of the year does not roll over or get refunded — and that only certain expenses are covered.
For example, over the counter medications no longer qualify for reimbursement unless they are prescribed by a doctor. Benefits administrators should be prepared to help employees identify the potential out of pocket medical expenses they will incur throughout the year, and determine how much (if any) cash should go into an FSA.
Communication Priority 4: Compare Family Coverage Options
If your employees are covering family members — including their spouse — on their plans, encourage them to compare their options. In some cases, transferring the children to a spouse’s policy or purchasing coverage on the exchange may be more affordable than covering the whole gang under your employer’s policy. That’s because some employers will only subsidize the employee’s coverage, or perhaps the employee and the children.
Some companies have even started adding surcharges onto premiums when an employee adds his or her spouse, and the spouse qualifies for coverage from his or her own employer. Help employees compare all of the options to determine which offers the best coverage at the best price, and communicate all surcharges and other fees that can raise the rates.
Communication Priority 5: Explain Health Incentives
Under the ACA, employers can charge more for health insurance for those employees who smoke or do not meet designated health standards. However, employees who agree to enroll in wellness or smoking cessation programs, and meet certain benchmarks can qualify for discounts and lower premiums. It’s up to the benefits team to communicate these policies to employees and help them enroll in the appropriate programs to ensure that they not only save money, but get healthy at the same time.
As a benefits administrator, it’s your job to ensure that all employees have the same access to benefits and get the coverage that they need. As we head into the open enrollment period, be prepared to communicate these important points to avoid last minute changes and unhappy employees.