How do I run open enrollment at a small company?

What open enrollment is, and what it isn't

Open enrollment is the yearly window, before your plan year starts, when employees can join, leave or change coverage for any reason, add or drop dependents and reset pre-tax elections. Outside it, changes need a qualifying life event. It's tied to your plan year, not the calendar: a plan that renews July 1 holds open enrollment in May or June.

Two decisions shape everything else. Active or passive enrollment: active means everyone must make an election (or waive) every year; passive means elections roll over unless someone changes them. Active is more work, but it catches outdated dependents and gives you current waivers. Do it at least in any year your plans or prices change. Who's eligible: confirm your eligibility rules (hours, waiting period, dependents) before you send anything.

Settle these before week −10, because every later step depends on them:

1. Plans: renew as is, change plan options on your current carrier, or move to a new plan. Compare the renewal with at least one alternative; see why your renewal went up.
2. How many options: one good plan is easier to explain than three. Two options (for example a copay plan and an HSA-eligible plan) is a common middle ground.
3. Employer contribution by tier: a percentage or a flat dollar amount for employee-only, employee plus spouse, employee plus children and family.
4. Eligibility: minimum hours (30 a week is common), waiting period (no more than 90 days), and which dependents qualify, including domestic partners if you choose to cover them.
5. Other benefits in the same window: dental, vision, FSAs, life and disability, so employees elect everything once.

A week-by-week timeline for a January 1 plan year

Notices you're required to send

These are the federal notices most small employers with a fully insured plan need around open enrollment. Your carrier or plan provider usually supplies the documents; delivering them is still the plan's job. Many employers put them in one annual notices packet with the enrollment materials.

An SBC can't run longer than four double-sided pages, and a willful failure to provide one can be fined up to $1,000 per failure, adjusted for inflation, for each affected person. A material modification outside renewal that affects SBC content requires notice at least 60 days before it takes effect. Some states add their own notices, so ask your carrier or plan provider for your state's list.

Electronic delivery needs its own check. Sending a link to an unused work inbox is not the same as establishing compliant delivery to everyone entitled to a notice. Identify people on leave, COBRA participants and spouses at different addresses, and use the applicable disclosure rule for each document. Retain the version sent, recipient group, delivery date and evidence of distribution. I would also verify that a person who requests a paper SBC can receive it free of charge.

Setting contributions: a worked example

Employees decide almost entirely on two numbers: what comes out of their paycheck and what a visit costs. Work out the paycheck number for each tier before you announce anything.

What employees want to know

Skip the jargon. Employees want to know four things: what comes out of their paycheck, what a doctor visit costs, whether their doctors are in network and who to call. A good announcement answers those in the first screen and links to the SBCs for detail. Then:

1. Announcement (week −6) What's changing and why, the enrollment dates, the per-paycheck cost table, and how to enroll. One page.
2. Q&A session (first week of the window) Thirty minutes, recorded. Walk through one realistic example: a specialist visit and a prescription on each plan.
3. Reminder (halfway) Who hasn't enrolled or waived yet. Remind people to check dependents' details and Social Security numbers, which carriers need.
4. Last call (two days before close) Explain what happens if they do nothing: under passive enrollment, last year's elections roll over; under active enrollment, they may have no coverage.
5. Confirmation (after close) Send each employee their elections and new deduction, and ask them to report errors within a week.

Common mistakes and edge cases

• No written waivers. Carriers check participation, and a waiver that names other coverage also protects you when someone later says they never had the chance.
• Payroll not updated. The most common error is the old deduction running into January. Reconcile the first payroll against the enrollment report.
• HSA elections that don't match the plan. Switching coverage changes monthly HSA eligibility and the annual limit. Confirm other coverage, Medicare and FSA status; eligible prior-month contributions may still be deposited by the tax filing deadline.
• Dependents who aged out. Children turning 26 during the year come off the plan under its rules; send COBRA information when they do.
• Employees on leave. Employees on FMLA or other leave still get enrollment materials and can make elections.
• New hires during the window. Someone hired in November needs two elections: one for the rest of this plan year and one for next year. Give them both sets of materials.
• Medicare-eligible employees. At an employer with fewer than 20 employees, Medicare usually pays first for workers 65 and older. Tell them before they elect; see employer health insurance and Medicare.
• Remote employees. Check that the network works where each person lives. See health insurance for remote employees.
• Applicable large employers (50+ full-time equivalents). Check that the cheapest self-only option is affordable under the ACA with the affordability calculator.
• Mid-year plan changes. If you're changing carriers outside renewal, the same steps apply on a shorter clock. See switching health insurance mid-year.

At Prescience, we design and run your company's health plan, including setup, enrollment and compliance, while you keep your payroll provider. The plan offers simple copays and a broad national PPO network. Use the actual proposal to explain employee contributions and confirm each provider rather than promising a particular payroll deduction or network match.