Open enrollment is a very busy time of the year for companies both large and small. Employers can approach employee benefits open enrollment in one of two ways: active or passive enrollment. Active enrollment means that employees MUST re-evaluate their previous benefit choices and elect from current options for the upcoming year. Passive enrollment allows employees to simply re-enroll in their current choices with little or no involvement in the open enrollment process.
So what are the pros and cons of active vs. passive enrollment?
According to the most recent (albeit very dated) survey available, 72% of U.S. employers prefer passive enrollment over active enrollment. Why is that? Well, for starters, it's simply easier on both ends. Employees can check off a box re-selecting their previous year's health insurance choices, and employers have less of an administrative burden to deal with, especially if plans remain relatively the same. A passive approach saves time for both employees and employers.
But does simple mean better? With benefits trending more and more towards consumer-driven health plans, a passive enrollment does not work well alongside that type of benefits approach.
According to a 2016 Open Enrollment survey by Aflac, over half of employees (54%) claim that they waste up to $750 per year on poor decisions related to insurance benefits. Passive enrollment is basically an invitation to continue making the same benefit election mistakes of the past, and it allows for a path of least resistance which cheats employees from an opportunity to reflect, reevaluate and reeducate themselves on what works best for their families. Life situations can change yearly, whether it's divorce, marriage, adoption, the birth of child, maturing dependents or significant health changes. An auto pilot approach to this simply isn't beneficial to employees or employers.