Am I Legally Obligated to Provide Health Insurance to an Employee Who Misses Open Enrollment?
Open enrollment is a period of time - commonly 2-4 weeks, once per year in the last quarter - when employees of companies and organizations can make changes to their benefit choices, including their health insurance plans. Employees may wish to upgrade to a more robust plan, downgrade to a less comprehensive plan or enroll in benefits for the first time. Changes to employee benefits are not allowed outside of open enrollment. The only exceptions to this rule are for employees who qualify for a special enrollment period (SEP).
Open enrollment is a busy time for HR managers and employees. Employees often have a lot of questions about their health benefit options, how to make changes to their benefit elections, or how to ensure that their coverage continues uninterrupted. They may also ask questions such as how dependents qualify for benefits and their portion of the cost for adding dependents. In order to have the most successful outcome, HR managers should prepare employees by explaining the different health benefits options and set aside time to meet with employees to answer specific questions. When open enrollment has ended, ask for feedback about how the process was handled in order to make the process even better for next year.
Most companies do a good job communicating information for open enrollment but there are times when employees miss the deadline. When an employee misses the open enrollment deadline, they are left without health coverage and/or the ability to make changes to their coverage until the next open enrollment timeframe. These consequences can lead to a very unhappy and potentially unproductive employee and extra administrative work for the employer. The best way to prevent this from happening is to communicate these consequences to employees just before the start of open enrollment season and then again, before open enrollment closes.
Am I legally obligated to provide health insurance to an employee who misses open enrollment?
Employers are not legally obligated to provide health insurance to employees who miss the open enrollment deadline.
The exception to this rule is for employees who qualify for a SEP because they have experienced a qualifying life-changing event including marriage, divorce, a move to a new home or work location that changes benefits eligibility, losing a spouse or child to death, and having or adopting a child. Employers should have policies in place for how to handle employees who qualify for a SEP. Learn more about special enrollment opportunities here: https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/hipaa-consumer.pdf
Note that Applicable Large Employers (ALEs) who are obligated to provide health insurance to their employees under the Affordable Care Act (ACA) will not be penalized for an employee who misses open enrollment as long as they have documentation that health benefits were offered to all eligible employees. Employees who choose to opt out of health benefits should be asked to sign a form acknowledging that they are opting out.
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