Making the right enrollment decision is important – and employees only have one chance per year
What is open enrollment?
Once a year – during open enrollment, employees can sign on to health insurance, make changes to their health insurance or stop their health insurance plan. The only other time an employee would be able to make an enrollment change is if they have a qualifying event, such as a child aging off their parent’s plan (26 years old), marriage (you can add a spouse to the plan), have a child (add the child to a plan), get divorced, or your spouse passes away.
A list of full qualifying events is listed here: https://www.healthcare.gov/glossary/qualifying-life-event/
High cost vs. Low Cost – High Deductible Plans
There are usually many options to choose from. Most people decide what health insurance plan to enroll in based on what comes out of their paycheck. For about 80% of eligible employees, this can be a decent strategy – cheaper the plan the better. The rule of thumb is that 80% of claims comes from 20% of employees enrolled, therefore 80% of the employees that are low users of the health insurance typically do not need high-cost benefits. “High-cost” meaning high premium, which usually is associated with lower out of pocket responsibilities (i.e. the plan pays for more).
Getting these employees on the proper plan can sometimes be a struggle. Many employees just enroll in what they were already enrolled in previously without thinking twice. For employees like the low user, companies can incentivize employees to join the cheaper plan by contributing some money to their Health Savings Account (HSA) plan or covering some of their qualified expenses.
For the 20% of employees that are moderate, regular or high users of the health insurance, a mid-deductible and/or low deductible option should be available to the employees. Depending on the size of the company, employers can offer a low and a mid-deductible option (typically a $1,000 and a $2,500-$3,000 option). The lowest deductible can be a Preferred Provider Organization (PPO) plan or a narrower network (HMO, EPO, etc.) and the mid-deductible could be a PPO or HSA depending on the deductible level. These options are referred to as silver, gold or platinum plans depending on the richness of benefits.
Employee education and support
The process of choosing the right plan is confusing – especially for first time enrollees – or when there are changes to plan options. Having open enrollment staffing is important. Employees may need to be walked through the math to make the right decision. The most common question asked is: “What is my total cost of healthcare?” Additional questions include:
- If I choose a cheaper premium option, will I have too much out of pocket expense?
- If I choose the more expensive option, will my payroll deductions outweigh the cap on my out-of-pocket liability?
All these questions are answered through group meetings and one-on-one sessions during the open enrollment period. A partnership with your insurance broker is important to employers when designing the right plans for employees – but also important for employees – to provide the service and support they need during this time.
The Oswald Company teams come on-site to meet with employees over the course of 1-3 days (usually) and make sure everyone is comfortable with their decisions and educated throughout the process.
More information on choosing plans: https://www.healthcare.gov/choose-a-plan/your-total-costs/
For more information Oswald Companies’ Employee Benefits – Employee Benefits and Health Insurance Solutions (oswaldcompanies.com)
Brian Stovsky is Business Development Leader, Private Equity, Oswald Companies
Brian Stovsky 