Medical Election Requirement

[Ken Diller]

Normally, medical plan elections can roll over from year to year. However, the last couple years our company required employees to elect or decline medical coverage at open enrollment. I believe they wanted to get an affirmative answer, one way or another, with the advent of Affordable Care Act requirements.

Given some of the uncertainties at the time, I was okay with forcing people to make an OE election.  However, does anyone know of a reason or rule where by we should continue to do this practice? I would prefer to revert back to roll over elections again, but I want to be sure I'm not missing anything.

Required? Good practice or bad?  Thoughts welcome.  Thanks.

[hr for me]

I will address this multiple standpoints:

From a payroll standpoint. It is always good to get new elections each year especially if the cost is changing. (have you ever tried to go back and find those original election forms from someone who has stayed the same for the last x years?)  It is in all essence a voluntary deduction and you generally want an up-to-date authorization, again especially if there have been major changes to your plan (increased premiums, different carriers, etc). State wage law might also have something to say on this, so if you are an employer in multiple states, it might be easier to pick the one that is most confining, which is probably requiring new paperwork each year.

From a Section 125 viewpoint, no one can claim they forgot or wanted to decline etc later on after OE. Instead you get a required employee action that creates the consequences.

From a communication standpoint, it is easier to tell ALL ees that they must do something rather than just some-- we all know how we people listen and what they sometimes hear (yep, I can be cynical right?).  And you have some way of knowing/auditing who has NOT responded to followup. If you don't require a response, you are then left to wonder why someone didn't respond -- did they really want future coverage, did they forget to turn in the form, but meant to, etc and do you still follow up?  If you assume they haven't because they don't want to change, you might be wrong. And corrections later (if possible) tend to make both sides grumpy.

Personally I think requiring all ees to affirmatively review all their benefits 1 time per year is not a bad thing (especially coming from payroll where it always surprises me who never looks at a paycheck stub until it is much too late)

[SPDkim]

Not a requirement, but definitely best practice.  It's likely that your plan offerings change every year--either options, covered benefits, cost sharing or premium costs--so it's important that your employees take the opportunity annually to make sure their elections still make sense for them.  In addition, the enrollment process gives you as the employer an opportunity to verify dependent information, which may be needed for ACA reporting and/or spousal surcharge administration.

Annual enrollment is the one time a year that almost every employer communicates about benefits (never mind that it should be a year-round exercise). Forcing an active election will also encourage more employees (and their families!) to review any and all information you can provide them about their benefits package and how to use it effectively--and these days, anything we can do to improve health literacy and health insurance literacy, the better off we all (employers and employees alike) will be.

[Chaz]

All the points above are good reasons to require employees to make affirmative elections each year.  Despite it all, however, some employees fail, for a multitude of reasons, to make elections by the plan's deadline.

I find a lot of employers don't want their employees to go "bare" with respect to medical coverage and those employees who neglect to complete the open enrollment process are defaulted either into the lowest cost medical plan offered or, more commonly, the previous year's election.  For other benefits (dental, vision, FSA, etc.), oftentimes, these employees would not be enrolled in coverage, even if they had coverage in the previous year.

Employers who go this route need to communicate it to employees and make sure the plan documents and SPDs properly reflect this design.

[hr for me]

Agree that communication is huge and being able to prove the "unrequested" deductions for those that neglect to re-enroll needs to be considered. 

But personally I like the proactive approach of a system that requires it and reminds in multiple different ways  (OE packet, emails, separate letter possibly,  note to boss, etc)  Having been through OE 3 times with my spouse this last round (old company, new owner and then division selloff within about 4 months), the better the communication is, the more likely that things will happen well.