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Active vs. Passive Open Enrollment; Weighing the Pros & Cons

David Rook

Employers who offer health benefits are  required each year to hold a benefits enrollment "window", commonly referred to as an open enrollment period. 

During open enrollment, employees can renew, adjust, or waive benefit options. Outside of a Qualifying Life Event, open enrollment is essentially the only time an employee can make changes to most (though not all) of their benefits. 

While an employer is required, by law, to hold an open enrollment, what's not defined is whether the enrollment needs to be structured as "active" or "passive". A passive enrollment period is one where an employee's benefit selections from the previous year simply roll-over and/or auto-migrate (within reason) to similar options. An active enrollment, on the other hand, requires an employee to elect, renew, adjust, and sometimes actively decline benefit elections. (The SPD and other plan documents will usually spell out these rules for employees.)

In a nationwide survey conducted by the JP Griffin Group this April, 2019 amongst full-time, benefit-eligible employees in the U.S., 50 percent (half) reported participating in a passive enrollment this year. Compared to a 2011 survey of employers, where 71% reported holding passive enrollments, these new findings represent a 30% decrease in the number of companies conducting their open enrollments passively.

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Topics: HSAs, passive enrollment, open enrollment, active enrollment, Strategy, FSAs, 401(k)s

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Best Practices For Optimizing Online Benefits Enrollment Systems

David Rook

There are countless online employee benefits enrollment systems out there today. While each is designed to make everyone’s lives easier — employees, employers, insurance carriers, payroll providers and benefits advisors alike, some don't quite live up to the hype.

While the initial transition from paper enrollment to any one of these online enrollment systems typically yields tremendous upside from an efficiency, speed and data integrity perspective, it's highly unusual for an enrollment system to be fully optimized for peak performance at first launch.

Tweaking and perfecting the system in the quest to maximize performance and outcomes should be an ongoing activity within your organization. Most agree that the goal of optimizing these systems is to make them as easy and intuitive as possible for your employees to use, while also guiding educated, informed and appropriate employee benefit decisions for your workforce.

Much of what’s considered “best practice” in online benefits enrollment has been adopted from best practices in eCommerce. After all, enrolling in benefits these days isn't that far off from purchasing something off Amazon, comparing cars at AutoTrader, or configuring a laptop at Dell.

While this list is by no means complete, here are some best practices you should consider adopting to optimize the configuration of your online benefits enrollment system for peak performance.

Capitalize on Nudge Theory 

While "nudge theory" won Richard Thaler a Nobel prize in economics, the concept is quite simple. It’s a subtle policy shift that encourages people to make decisions that are in their broad self-interest.

Put into practice, it simply means using "opt-out" as the default option for certain benefit selections. This requires someone to actively deselect an option. Failure to do so results in auto-enrollment in that benefit. A great example of nudging is pre-selecting a 3% contribution into an employee's 401(k) vs. leaving the field blank. This simple change will have a massive impact on 401(k) participation.

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Topics: Employee Benefits, Automation, open enrollment, Strategy, Decision Tools

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How You Know it's Time to Fire Your Employee Benefits Broker

Jeff Griffin

Many companies stick with their employee benefits broker for years on end, not giving too much thought to whether a change is warranted. HR directors always have long to-do lists full of time-sensitive issues, so finding a new broker is typically the last thing on their minds — except maybe during contract renewal season if the news isn’t good (and it never seems to be with health insurance these days).

The issue here is that there is a point when it’s time to fire your broker, but recognizing it when the time comes is difficult because you have a million things on your mind and far more pressing matters at hand. There are some definite signs it’s time to find a new employee benefits broker and it’s important to keep an eye out for them. Here are some of the big ones.

They’re Not Helping You Contain Costs Year-Round

Employee benefits brokers should not only be reaching out when it comes time for your annual renewal. Top-notch benefits consultants are working with you year-round to make sure you’re taking every possible step to keep your benefits costs contained.

True cost containment strategy requires constant effort in the form of chronic condition identification and management, medication adherence, large-scale claim intervention, consistent execution of a sound wellness program, financial oversight, and diligent carrier reconciliations.

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Topics: Employee Benefits, Compliance, Education, Disruption, Strategy

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What is Stop Loss Insurance?

Jeff Griffin

More and more companies are choosing to forego the traditional method of funding health insurance and are instead opting for a self-funded insurance program. 

For many companies, this is a great way to reduce expenses because the employer gets to drop any collected but unspent premiums to the bottom line. (In a fully-funded scenario that profit would go straight to the insurance company.) That said, self-funding is also a gamble, since an employer can also experience a plan year in which medical claims are higher than collected premiums.

This is where stop loss insurance comes into play.

What is Stop Loss Insurance?

Stop loss insurance is essentially insurance for an employer’s self-funded insurance plan (the technical term is Reinsurance or Excess Insurance). It caps the amount an employer would be responsible for paying in the event of a catastrophic claim, or series of catastrophic claims.

Stop loss caps come in many shapes and sizes and are typically driven by the risk tolerance of the company putting them in place. Stop loss insurance can prevent you from ending up in a number of financially dangerous situations because of employee illness or injury, including:

  • Decimating your budget (or your emergency reserves) for the year out of a need to cover employee healthcare costs.
  • Being unable to pay employee healthcare costs, then finding yourself being sued as a result.
  • Losing great employees due to the fact that you're no longer providing the coverage they expected (and used to receive) from their employer.
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Topics: Employee Benefits, Plan Design, self-funding, CHRO, Strategy, Risk Management

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Why Employee Benefits Might Finally Play a Role in Seasonal Hiring

David Rook

When most companies think of hiring seasonal workers, they’re not thinking about employee benefits. Most seasonal hires don’t qualify for benefits beyond that of an employee discount for a variety of reasons — they won’t be working for a long enough period of time (or enough hours) to qualify for healthcare, and employers don’t really need to entice them to stay onboard after the end-of-year shopping season.

That’s all changing this year. With an economy that’s at virtual full employment, seasonal hires may be many companies’ best option to coax some of these works into becoming full-time staff. With this in mind, it makes good sense to take another look at your employee benefits policy when it comes to attracting seasonal workers.

Employee Benefits to Attract Seasonal Hires

Andrew Challenger, vice president of career transitioning firm Challenger, Gray & Christmas, believes this year will yield more seasonal-to-permanent hires than in recent years, and if you’re planning to implement this strategy, you’ll need to make sure your employee benefits package is good enough to make those temporary workers want to stay on full-time. But first, you have to figure out how to get them in the door to apply.

Your seasonal hires may be attracted to your company simply because of the employee discount. Perhaps they get 20 or 30 percent off regular priced items in your store (some companies even offer up to 50 percent!), which could help them get through their holiday shopping with a lighter punch to their wallets.

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Topics: Employee Benefits, Recruiting, Strategy

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Active vs. Passive Enrollment: Which One is Right For Your Company?

David Rook

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?

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.

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Topics: passive enrollment, open enrollment, active enrollment, Strategy

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Creating a Strategic Advantage Through CFO/CHRO Alignment

David Rook

In this day and age, it's critical for Chief Financial Officers (CFOs) and Chief Human Resources Officers (CHROs) to partner together with a shared sense of purpose to ensure a strategic advantage for their organizations. 

Consider the role of each in managing one of the largest costs to organizations today: healthcare benefits.  Due to the increasing cost of employer-sponsored healthcare, employee benefits are now often the third or fourth largest line item on an organization’s P&L. CFOs cannot ignore such a sizable expenditure, and must take a keen interest in understanding the underlying cost factors of providing medical coverage to workers.

CHROs are in a unique position to provide insight into these cost factors. Thus, CFOs and CHROs share the responsibility of managing human capital costs appropriately. Only with solid alignment between the objectives of the CFO and the CHRO will organizations continue to grow and prosper in today’s hyper competitive corporate climate.

We recently released an in-depth ebook which addresses not only the obstacles to creating CFO/CHRO alignment, but also the commonalities the two functions share, and the steps that must be taken to achieve proper alignment and sustainability of both financial resources and human capital resources in the coming years. You can download this free ebook/white paper simply by clicking here. It covers all of the following:

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Topics: Employee Benefits, Strategy

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