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Active vs. Passive Open Enrollment: Weighing the Pros and Cons

Most can agree, open enrollment is a challenging time for both employers and employees alike.

Not only do the decisions made during open enrollment impact the health of employees, it can also have an impact on an employee’s family members. The importance of clear communication during open enrollment is vital. The sheer complexity of offerings and the benefits selection process makes it all too common for misunderstanding and can ultimately lead to confusion, lack of coverage, additional exposures and impact employees’ finances. Further, many individuals don’t grasp how much of an impact their health can take on their wealth.

Employers have two ways they can conduct the open enrollment process; active and passive. An active enrollment requires employees to decide and choose a benefits selection each enrollment period—as opposed to passive enrollment, where employees are automatically re-enrolled in their current selection, with little or no involvement in the process.

In one sense, employers may believe passive enrollment is superior because it takes less work on the side of the employer or plan manager, offers less opportunity for employees to miss the enrollment deadline and is considered the path of least resistance. Yet, many others believe that active enrollment is preferable since it requires employees to reevaluate their current lifestyle, family status and other health factors–while socializing new offerings. There are advantages and disadvantages to both types of enrollment, yet today most employers opt for an active enrollment prompting employees to stay engaged and informed.

Here's a useful breakdown of the pros and cons to help your organization make the best decision for your workforce:

Active Enrollment

Pros

Cons

Higher Engagement
Shifting to an active enrollment process can help keep employees engaged and evolve their understanding of the benefits offered. This sort of engagement can help employers stay in touch with employee demands and help keep the benefits package fresh to attract and retain talent.
Time Consuming
Planning for an active enrollment can be very time consuming for any employer but especially those with limited resources. The feasibility of delivering an effective communications strategy while capturing all relevant enrollment information in a timely manner requires a well thought out plan and the time and resources to execute.
Ongoing Communication
Well-communicated benefits can make a world of difference for employees. Providing reminders and reaching out through various media outlets can make it hard for employees not to pay attention, especially if the message is clear; not making an election means no coverage. Follow-ups are encouraged to ensure elections are completed and employees take ownership of their decisions.
Costly
Putting together the necessary resources for an active enrollment can be expensive for employers when considering enrollment systems, engagement platforms and overall cost of communications. Limited budgets can struggle with an effective enrollment process due to a lack of resources to help convey the renewal information.
Better Records
Active enrollments can ensure employee records are more kept up to date by having elections be required. This approach can also help employers gather important information on employee dependents and beneficiaries to help ensure all parties have the most up to date and relevant information. This can also help keep the correct coverages in line with the carrier partners that are insuring members.
Greater Risk of Miscommunication
Open enrollment communications that get overlooked can create bad behaviors and lead to confusion on the benefits offerings. By not engaging all employees with the benefits offerings and enrollment process, employers are susceptible to employees becoming dissatisfied with the benefits offered.
Facilitates Changes
When employers alter the benefits package, most notably the health plan options, having an active enrollment can help communicate the differences and change employee behavior to put more consideration towards the benefits offerings. This sort of engagement helps employees become highly involved in the decision-making process and provides the opportunity to build employee loyalty over time.
Gaps in Enrollment
With an active enrollment, there is a higher chance of gaps in many areas of the benefits process. There can be gaps in the enrollment, coverage, care and financial elements that can impact both employees and employers. It can be costly if employers don’t deliver a clear and effective open enrollment process.

Passive Enrollment

Pros

Cons

Less Burden On HR
In general, this type of enrollment is popular because it’s easier. With an increasingly busy workforce, HR is often fighting to stay on top of business initiatives, retention and recruitment, wellbeing, compliance and more. By automatically re-enrolling employees, employers considerably reduce administrative tasks. Conducting a passive enrollment can almost completely eliminate one of the most significant and time-consuming annual tasks for HR professionals, offering more time for other critical organizational goals.
Potential for Poor Choices
The biggest concern with a passive enrollment is the likelihood of employees making poor decisions on their benefit elections. Employees who don’t pay attention or don’t want to spend time analyzing their benefits can inadvertently make costly decisions.
Offsets Disengagement
A passive open enrollment addresses the challenge of employees who neglect open enrollment and run the risk of losing coverage. Removing this burden can be a major relief for employers and limits the number of last-minute changes. There’s also no need for constant communications and reminders to employees about open enrollment deadlines.
Lack of Coverage
Often employees can overlook open enrollment during a passive scenario and not obtain necessary or specific coverages needed for them and their families. It’s also easy for employees to miss out on new benefits or value-added benefits that can be taken advantage of by employees with proper understanding.
More Convenient
The simplicity of this option takes the burden off employees, a positive side effect considering most employees find the benefits selection process to be extremely stressful. Instead, they may feel a sense of ease knowing their coverage will remain during the transition to the new plan year. In theory, a passive enrollment puts employees in the driver’s seat to make adjustments to healthcare decisions when necessary.
Lack of Appreciation
During a passive enrollment, it can be more likely that employees do not perceive the total value of the benefits offerings. The benefits can be a significant attribute to the compensation package, but if the employee population is not aware or informed, they may not appreciate the offerings. This lack of understanding can even lead to a poor perception, or skewed view of the benefits offered by employers.
Deeper Understanding
When there is little or no change to the benefits being offered, employees have the advantage of repetition. They can apprehend more about their benefits package as they grow familiar with the details year-over-year. Employers can also offer consistency in their messaging and reiterate essential points in each enrollment period, providing a deeper understanding of the benefits to employees. Besides, this can mean a less stressful open enrollment for both plan managers and employees and result in a more positive experience.
Fewer Reassess
Passive enrollments can be a missed opportunity for employees to familiarize themselves with the benefits and evaluate how their needs have changed from the last enrollment period. By not actively engaging in the benefits selection process, these missed opportunities can mean employees have too much coverage or lack appropriate coverage, which can be dangerous and also costly to employees and the employer in the long run.

With more employees viewing benefits packages as a key factor in accepting a position at a company, benefits offerings and the understanding of these offerings can inform overall satisfaction. Employers have an opportunity to provide an effective, smooth open enrollment, regardless of conducting an active or passive enrollment.

However, hosting an active open enrollment may help employers reenergize benefits discussions and engage employees in the process. Taking ownership of benefits decisions can help curb the financial impact of poor enrollment decisions and employers that provide effective communications to engage employees, increase their recruiting and retention capabilities. Ultimately, this can become a more streamlined process for employers that creates efficiencies in the renewal process.

Want to learn how to host open enrollment like a pro? Visit OneDigital’s Open Enrollment Hub.

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