Open enrollment is among top priorities for HR teams as it acts as a major driver for recruitment and retention. Open enrollment is a crucial time where employees are permitted to adjust or update important benefits like health care coverage and voluntary life insurance. Commonly, open enrollment changes take place once per year, and most employers conduct the process two to four weeks before the effective date of new benefits. The end of year (December) is said to be the best month to renew enrollment.
As open enrollment takes place, HR teams should start to think about strategy, such as what benefits to cut or renew – or that HR should propose new benefits depending on employees wants and needs. Together with the HR team, administration should help by considering how to get employees enrolled in the available benefits. Among these approaches are passive enrollment and active enrollment.
Passive enrollment is an enrollment strategy that employers use to simplify and maintain benefits participation. Employers use this strategy to roll over employee’s benefit elections from the previous enrollment period.
JP Griffin survey revealed that half of all surveyed employers use a passive enrollment strategy. For one, there is a much smaller chance that teams have gaps in their enrollment process. It also requires less time and energy from the HR team.
Active enrollment is a strategy where each employee actively enrolls in benefits every enrollment period. The difference with passive enrollment is that active enrollment requires employees to actively participate in the full enrollment process each year, whereas passive one only requires employees to simply sign off on the same benefits as the year before.
Active enrollment is the best way to engage employees in each enrollment period because it requires employees to review all available benefits each year. It also communicates what the company values in taking care of its employees – a key component of culture. Yet, active enrollment can be expensive and time-consuming. Employees might find themselves dedicating all of Q4 to just open enrollment.
There are some critical points HR should consider when choosing which enrollment to conduct. For instance, previous benefit elections might not suit current employee’s best interest in the present. While, some employees might not even remember their previous choices. Likewise, when employees are automatically enrolled in a benefits package, they might miss out on benefit details that might be critical for their choices, resulting in higher expenses for the year ahead. The passive strategy might be better used for large organisations with thousands of employees as it will be time wise.
On the other hand, by relying on active enrollment, employees are promoted to examine past benefit elections, current needs, and possible alternatives. This makes it a superior strategy to passive enrollment. Thus, active enrollment will be best used by small to medium companies to save budget. This might be a bit time consuming but for a business that still needs to scale and compete with larger competitors, HR should have a better strategy to retain and attract top talents.