Ahh, open enrollment season. It’s the time human resources and benefits professionals spend much of the year preparing for, even though many American workers don’t think twice about their health benefits from one year to the next.
However, this year, open enrollment should be given a second thought … and maybe third and fourth thoughts, too.
According to the 2013 Aflac WorkForces Report, 90 percent of consumers are on autopilot, meaning they select the same health insurance plan year after year. This statistic becomes alarming when coupled with data from Aflac’s Open Enrollment survey, which found that as of August 2013, 70 percent of employers had not communicated changes to health benefits as a result of reform, despite the Oct. 1 deadline.
What this means is people may be apt to select the same coverage again for 2014 without understanding how their company’s health insurance plans have changed. This could lead to wasted funds if workers are paying for extra coverage they won’t need. Alternatively, employees could find themselves without some coverage if their insurance benefits have decreased.
You may be wondering, “How can my small business communicate effectively to employees while also meeting reform’s many requirements?”
The six key messages below can enable you to cut through the noise to help your employees avoid costly mistakes.
Communicating About Health Insurance Open Enrollment
Your Company’s Plan
By Oct. 1, 2013, most small businesses should have told workers whether or not they plan to offer employer-sponsored major medical insurance, and to provide information about the Health Insurance Marketplace (also known as exchanges) and potential subsidies.
Take note, and know that if you have 50 or fewer full-time equivalent employees, you will be eligible to participate in the Small Business Health Option Program (SHOP) Marketplace next year.
Workers’ Risk of Losing Employer Contributions
If workers purchase coverage through exchanges, they may miss out on employer contributions to company-offered health benefits. They may also lose the tax break from employer contributions that are excluded from federal income taxes.
This information should have also been included in the Oct. 1 notice.
Your Company’s Benefits-Coverage Level
Workers need to know your company’s level of benefits coverage to compare plans accurately. Today’s average actuarial value (AV) of employer-provided coverage is 80 to 89 percent. Actuarial value (AV) is the amount a plan is expected to pay, on average, for the Essential Health Benefits (EHBs) offered by the plan. The remaining amount is represented as co-payments, deductibles, and co-insurance and would be paid by the covered individual(s).
In addition to offering plans with 80 and 90 percent AVs, the public Health Insurance Marketplace will offer plans with the same benefits levels but lower AVs (60 and 70 percent), which means lower premiums but more of out-of-pocket costs such as copays, deductibles and co-insurance.
Money Your Small Business Contributes
Talk to employees about your company’s investment to paint a clear picture of their total compensation packages.
Since health care costs continue to rise, your total contribution can have a substantial effect on workers’ wallets.
Voluntary Benefits Offerings
Even for those with major medical insurance, voluntary insurance policies can provide a financial safety net in the event of serious illness or injury.
Because dental insurance is the only voluntary benefit offered through the public Health Insurance Marketplace, other voluntary options such as disability, life and accident coverage must be purchased separately.
Your Company’s Total Rewards Strategy
If your company offers perks such as a wellness program, flex time or discount gym memberships, boast about them during open enrollment. It is the perfect opportunity to educate workers about all your company has to offer.
Some might not enroll in these programs, but awareness will improve employees’ opinions of your company’s benefits.
[1] Gabel, J.R., Lore, R., McDevitt, R.D., Pickreign, J.D., Whitmore, H. Slover, M. & Levy-Forsythe, E. (2012). More Than Half Of Individual Health Plans Offer Coverage That Falls Short Of What Can Be Sold Through Exchanges As Of 2014. Health Affairs, 31(6):1339-1348.
Health Care Photo via Shutterstock
Shawn Hessinger
Hi Michael,
I think communicating changes in health plans is difficult for businesses of all sizes. But for small businesses in particular, who may have a very small human resources department (or no human resources department at all) I think it can be particularly challenging. This may be a problem in particular if small businesses have recently changed programs or providers in an effort to find better, more affordable coverage and are just getting up to speed on that coverage themselves.
Aira Bongco
I think the problem lies on the fact that you cannot please everybody. While you can try to provide as much coverage as you can, you cannot do it if your business’ budget cannot allow it. You need to sort out everything that can act as a compromise between the two parties.
Health insurance is relevant for your staff’s well being and every employee should be insured against medical illness or accidents while traveling to work.
ed pierce
My business is small enough that I don’t have to be concerned with health insurance yet. I’m not sure how I feel about having to go through all of the paperwork and employee benefit meetings.
roger sund
It is a scam congress bought shares of stock in all the eligible companies now all they have to do is pass a law to require everyone to sign up with low rates after everyone signs up then they will adjust the rates higher and higher and give less benefits and more co-pay meanwhile their stockholdings go up and up don’t forget they also have stocks in all the pharmaceutical corporations also read the fine print the fine for not signing up is only $95 they want me to sign up for $1200 a month which totals $14,400 per year plus co payments I think I. will choose the $95 fine I make $24,000 a year wake up if you think I am telling a lie just wait until your company offers you a flat salary per year raise for your own purchased healthcare then they hike the rates after year one and it will get to the point where you will have no money if I had $1200 per month I would buy a Mercedes and a home not health care
$95 – OR – 1% of your income, whichever is higher.. Hope you make less than ten grand a year.