Open Enrollment

[Guest MC2]

Is an employer required to have a period of open enrollment when there is a rate increase in employee contributions toward the cost of health insurance?

[A Shot in the Dark]

Not Generally. You will need to check the Plan Document.

Most 125 Plan documents has language that states something this:

Premium Payments shall equal the Participant's share of the cost of such Medical, Dental, Life and Disability Insurance Plan coverage, and shall be adjusted automatically in the event of a change in such cost. The maximum amount of Compensation reduction a Participant can elect cannot exceed the amount of the Participant's share of the cost of Medical, Dental, Life and Disability Insurance Plan coverage.

So unless there is a significant loss, reduction or change in benefits, an open enrollment would not be required.

[Guest cebsnov]

if the plan is in a section 125 "premium only plan" can the ER require all ees to go pre-tax for their contributions. Would this require the ER to get all ees to sign an election form each renewal since it does affect an ees soc sec benefit?

[jmor99]

cebsnov: A plan can be designed to require 125 participation if the employee wants the insurance (assumes there is a cost for it, naturally). The plan can also incorporate what is known as an "evergreen" clause, which will negate the need for a new annual election (assumes the employee keeps the same coverage year after year). I can't see any connection with the SS impact.

[MARYMM]

cebsnov: A plan can be designed to require 125 participation if the employee wants the insurance (assumes there is a cost for it, naturally). The plan can also incorporate what is known as an "evergreen" clause, which will negate the need for a new annual election (assumes the employee keeps the same coverage year after year). I can't see any connection with the SS impact.

This is a concern among older ee's nearing retirement. By electing Sec 125 pretax benefits, their SS wages for the last years of their employment are reduced and they believe that their monthly SS benefits will be reduced.

[GBurns]

It is quite easy to use the calculators on the SSA website to plug in the info from the employee's recent Earnings & Benefits Statement and show year by year that there is negligible, if any, impact on their SS Retirement Benefit caused by the section 125 pre-tax salary redction.

Info from the Federal study done by the OPM before the Feds put in their 125 Plan is still on the OPM websites, showing the negligible impact, along with explanations and worksheets.

From these you could put together some examples, if you do not want to do each employee. What I usually do is do a representative cross-section of the employee population and use as illustrations. The results are explained to a few of the employees then identiication is removed before using. Be sure to include any union stewards or particulary vocal employees. Including them gets the word out even better.