Open enrollment for most companies takes place during Q4 in preparation for a new benefits plan year starting January 1st, and it can be a stressful time as companies juggle insurance carrier deadlines while racing to lock down budgets for the new year. And if a company has to make the difficult decision of conducting a reduction in force (RIF) due to financial reasons, then a layer of complexity is added to the already challenging time-sensitive number of tasks to complete. However, working closely with trusted HR partners and benefits brokers can help make this process as smooth and streamlined as possible. Read on for three factors to consider as you navigate open enrollment for your team.
1. Small Group vs. Large Group
If offering a group health plan to your employees, you will need to determine whether your company qualifies for either a small-group or large-group plan, which is often dependent upon the state in which the plan is based, while keeping in mind that many insurance carriers have minimum participation rules that affect coverage options. For example, currently in California, large group is generally for employers with more than 100 employees while in Texas large group is typically for employers with more than 50 employees.
Small-group rates are typically age-banded, meaning that premiums will correspond to the age of each employee and rates will increase with age. Large-group premiums are pre-defined and, depending on the state location, employers may have insight into how employees have used company benefits. For example, large group plans in California may determine whether there have been large employee claims (barring employee information protected by HIPAA) in the current plan year which likely would cause premiums to increase for the upcoming plan year.
Additionally, some carriers may also have participation requirements that must be met in order to maintain coverage, regardless of whether an employer is considered a small group or large group. And furthermore, some carriers may require a certain percentage to reside in the state where plans are based. For example, some insurance carriers in the small group market for California require at least 51% of employees to reside in California.
2. Gather Employee Feedback
While it’s ideal to maintain benefits that are currently being offered, evaluating what is important to your employees and adjusting your offerings accordingly can help make your overall benefits package more valued while also staying within your overall budget.
Before finalizing plan options, we suggest sending out a brief survey to employees to better understand what benefits are being used, what challenges have come up (if any), and what employees are hoping to see for the next plan year. However, in an effort to help level set employee expectations, it is important to note that while the survey aims to gather input, changes are not guaranteed.
If your survey results show that employees are barely using vision coverage yet many are looking for more robust medical options, you might consider changing your vision plan and allocating any additional budget to your medical plans, for example. Or, if employees have expressed that their dental offices do not accept their insurance, you may want to consider changing carriers altogether which could result in an overall decrease in premiums (the new carrier might also offer a rate pass, meaning that premiums will stay in effect without increasing for a certain number of years, typically two).
3. Low-cost Additions
Let’s say that you have determined whether you are considered small group or large group and you have collected employee feedback on benefits offerings. If you still feel compelled to enhance your benefits offerings but are constrained by a tight budget, below are some considerations to take into account:
Flexible spending account (FSA) - an FSA is a benefit that allows employees to set pre-tax funds aside to cover qualified expenses. While there will be associated plan administration costs, employers are not required to make contributions to these plans, so employees can opt in voluntarily for further potential savings. Typical FSA offerings include a healthcare FSA for eligible medical expenses and health-related costs, dependent care FSA for eligible childcare and eldercare costs, parking FSA, and commuter FSA
Voluntary life insurance - if it is not within an employer’s budget to offer group term life insurance, companies can opt to provide voluntary life insurance in which employees are responsible for 100% of the cost. However, unlike group term life insurance, employees can decide how much insurance to purchase and they may also have the option to port or convert their policy if they exit the company
Wellness stipend - offering a set dollar amount that employees can use for company-defined wellness expenses is another pathway that employers can take to expand overall offerings. For example, some employers provide a $50.00/month stipend for employees to use on things such as a gym membership, fitness classes, wellness apps, etc. However, before implementing an employee stipend, we recommend consulting with your accountant or tax professional for more information on how to handle stipends from a tax perspective.
While a licensed benefits advisor can help with specific rules and regulations, an HR expert can help you navigate the options available to your company. Getting ready to prepare for open enrollment? See our blog post and get in touch with us at hello@retainhr.com!