Open Enrollment
Open enrollment is the yearly window, usually two to four weeks before a new plan year, when employees can enroll in, change, or drop employer benefits such as medical, dental, vision, and FSA or HSA contributions. Outside that window, changes are generally allowed only after a qualifying life event.
Two things share the name. Employer open enrollment is set by each employer for its own group plans, usually in the fall for a January 1 plan year. Marketplace open enrollment is the federal window for individual ACA coverage. This entry covers the employer version. For software that runs it, see the open enrollment software guide.
How open enrollment works
- 1Plan renewal. HR and the benefits broker finalize carriers, plans, premiums and the employer contribution for the next year.
- 2Communication. Employees get plan summaries, premium tables and deadlines, typically a few weeks before the window opens.
- 3Elections. Employees choose plans, add or remove dependents, and set FSA or HSA amounts, usually in the benefits system through self-service.
- 4Defaults. Employees who don't act are handled by plan rules: often existing medical elections roll over, while many plans require a new health FSA election each year.
- 5Verification. New dependents may need proof of eligibility through dependent verification.
- 6Carrier and payroll updates. Elections go to carriers through carrier integration or files, and new deductions go to payroll for the first pay date of the plan year.
Mid-year changes are limited to qualifying life events. Under HIPAA, employer group health plans must offer special enrollment after events such as marriage, birth, adoption or loss of other coverage, and the employee must request it within 30 days (U.S. Department of Labor).
Example
Illustration: a 150-person company runs open enrollment from November 3 to November 21 for a January 1 plan year. By the deadline, 132 employees (88%) have made active elections. The other 18 roll over their current medical plan and, under this plan's rules, get no FSA contribution for the new year.
The employee-only premium share for the most popular plan rises from $120 to $132 a month. With 24 semimonthly pay periods, the deduction changes from $120 x 12 / 24 = $60.00 to $132 x 12 / 24 = $66.00 per paycheck. If 90 employees are on that tier, payroll has to update 90 deductions before the first January pay date. A missed update under-collects $6 per paycheck per person, or $540 per pay period across the group, which then has to be recovered or absorbed.
Related terms
- Life event: the exception that allows changes outside open enrollment.
- Dependent verification: checking that added dependents qualify.
- Carrier integration: how elections reach the insurers.
- FSA and HSA: accounts whose contributions are usually set at open enrollment.
- Benefits reconciliation: matching carrier bills to payroll deductions afterwards.
- Benefits enrollment checklist: a free checklist for running the window.
Common mistakes
- Announcing the window late. Employees need time to compare plans and talk to their family. A one-week window with no warning produces rushed choices and help-desk overload.
- Unclear defaults. If employees don't know whether their elections roll over, some will assume they do and lose FSA coverage.
- Not testing deductions. Run a test payroll with the new deductions before the first pay date of the plan year.
- Sending carrier files without reconciling. Mismatches between the benefits system and carrier records show up as denied claims in January.
- Ignoring dependents' data. Missing dates of birth or Social Security numbers for dependents can hold up enrollment with the carrier.
How long should open enrollment last?
Two to four weeks is typical. Shorter windows produce rushed choices; longer ones lose urgency and push the carrier and payroll updates too close to the plan year start.
Can employees change benefits after open enrollment ends?
Generally only after a qualifying life event, such as marriage, birth or adoption, or loss of other coverage, and within the plan's deadline, which is 30 days for HIPAA special enrollment in group health plans.
Sources
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