A passive enrollment occurs when an employee is simply re-enrolled in the benefits from the previous year with no action required by the employee unless they want to make a change to the enrollment.
During annual open enrollment, employees may ask to “keep everything the same as last year” but employers should be wary of these passive enrollments. While you may save time upfront, not requiring employees to make an affirmative election can cause problems down the road.
Four Risks of doing passive open enrollments
What was processed last year, or in previous years, may not be available this year, may have changed significantly, or may not be what the employee remembers. This can lead to very uncomfortable conversations later in the year when changes cannot be made.
Any changes to payroll deduction amounts should be acknowledged by the employee, even if the difference in their deduction is minimal.
Employers should have a record of offering employee benefits and the open enrollment process. These records are especially important for medical benefits relative to ACA requirements, but they also show that benefits were offered equitably to all employees.
There are constant changes that occur with insurance benefits from year to year. It is important to ensure that employees make an informed decision about the benefits they enroll in, especially when multiple plans are offered.
Benefits administration has become increasingly complicated over the years. In addition to tense conversations and disgruntled employees, there are also legal landmines to avoid. While it may be tempting to avoid the bottleneck of open enrollment, it is an essential component of employee communication and reducing employer risk.