For most employ­ers, employ­ee ben­e­fits rep­re­sent a sig­nif­i­cant por­tion of their over­all bud­get and a crit­i­cal part of their employ­ee recruit­ment and reten­tion strat­e­gy. Ben­e­fits vary from employ­er to employ­er but can range from med­ical or den­tal insur­ance to flex­i­ble spend­ing accounts, life and dis­abil­i­ty insur­ance, and more. The annu­al process of renew­ing those ben­e­fits involves a great deal of work, most of which is unseen by employees.

As you final­ize your ben­e­fits line­up for the next year and hold your first open enroll­ment meet­ing, we’re shar­ing five tips relat­ed to com­mon issues we hear from Min­er­al cus­tomers each year.

There are dif­fer­ent ways to han­dle ben­e­fit elec­tions. They range from affir­ma­tive or “active” elec­tions that require every­one to select options, to ever­green “rolling” elec­tions that only require employ­ees to take action if they want to make changes. There are also many oth­er options in between. Which option an employ­er choos­es depends on their strat­e­gy for par­tic­i­pa­tion, the types of ben­e­fits they offer, state wage deduc­tion rules, and oth­er fac­tors. Before you get start­ed with ben­e­fits elections:

  1. Dou­ble check to con­firm that any elec­tion rules you are using dur­ing open enroll­ment match what was dis­cussed with your insur­ance car­ri­er or third-par­ty admin­is­tra­tor (TPA), as well as match­ing what you say to employ­ees in plan mate­ri­als and open enroll­ment communications.
  2. Decide what hap­pens if an employ­ee who is enrolled in cov­er­age takes no action dur­ing open enroll­ment. Will their cov­er­age be dropped? Will some or all of their elec­tions car­ry over to the next plan year? Clear­ly com­mu­ni­cate the con­se­quences of inac­tion, if any.

Don’t Forget About COBRA!

Fed­er­al COBRA applies to most employ­ers that offer group health cov­er­age and that have 20 or more employ­ees. COBRA allows employ­ees (and cer­tain depen­dents) who expe­ri­ence qual­i­fy­ing events dur­ing the plan year to con­tin­ue cov­er­age for a peri­od of time, at their own cost. Many states have sim­i­lar laws for employ­ers with few­er than 20 employ­ees, often called “mini-COBRA” laws. Indi­vid­u­als who have elect­ed fed­er­al COBRA have many of the same rights as active par­tic­i­pants and must be pro­vid­ed the option to waive or elect cov­er­age or add or remove depen­dents as well. To noti­fy employ­ees of their COBRA rights:

  1. Clar­i­fy who is respon­si­ble for send­ing open enroll­ment infor­ma­tion to COBRA qual­i­fied ben­e­fi­cia­ries. If you admin­is­ter COBRA in-house, ensure the per­son respon­si­ble knows open enroll­ment com­mu­ni­ca­tions should include COBRA qual­i­fied beneficiaries.
  2. If you are using a third-par­ty ven­dor for COBRA admin­is­tra­tion, make sure they send any required com­mu­ni­ca­tions or paper­work to eli­gi­ble employ­ees. If the ven­dor doesn’t do this, the respon­si­bil­i­ty gen­er­al­ly falls on the plan spon­sor (the employer).

Leverage Attention

The open enroll­ment peri­od hap­pens when employ­ees are pay­ing clos­er atten­tion to ben­e­fit-relat­ed top­ics. Open enroll­ment meet­ings and com­mu­ni­ca­tions can present addi­tion­al oppor­tu­ni­ties to gath­er data and insight into the needs and expe­ri­ences of par­tic­i­pants in your ben­e­fit pro­grams. Use this time to:

  1. Con­sid­er includ­ing an employ­ee sur­vey or oth­er­wise col­lect­ing feed­back, even anec­do­tal­ly, on areas of inter­est or con­cern. This might include ask­ing for feed­back on the open enroll­ment process and com­mu­ni­ca­tions. If you hear grum­bling about a spe­cif­ic process or hear peo­ple express con­fu­sion about a par­tic­u­lar option, that can be a great way to iden­ti­fy oppor­tu­ni­ties for edu­ca­tion or change. For exam­ple, if sev­er­al peo­ple men­tion in an open enroll­ment meet­ing that drug prices are too high, you might decide to send a fol­low-up com­mu­ni­ca­tion to remind employ­ees about bulk mail order pre­scrip­tions and the addi­tion­al val­ue that can provide.
  2. Con­sid­er a depen­dent audit. Depen­dent audits ensure only eli­gi­ble indi­vid­u­als are on the plan, which keeps employ­ers in com­pli­ance with their plans as writ­ten and reduces any unnec­es­sary costs for inel­i­gi­ble depen­dents. Tim­ing an audit to occur just before or dur­ing open enroll­ment can reduce com­pli­ance com­pli­ca­tions if a depen­dent is deemed ineligible.

Carefully Review Salary Deduction Agreements

Ben­e­fit costs typ­i­cal­ly change from year to year and most state wage and hour laws require employ­ees to autho­rize pay­roll deduc­tions for ben­e­fit con­tri­bu­tions. Use this time to review your exist­ing deduc­tion agree­ments and ensure they cov­er the most cur­rent options. Then gath­er updat­ed deduc­tion agree­ments from employ­ees. As you review these agree­ments, con­sid­er the fol­low­ing questions:

  1. Do they clear­ly indi­cate the approved amounts to be deduct­ed from pay and the frequency?
  2. What rights do employ­ees have to choose whether or not their cost share is tak­en pre-tax or after-tax? If you have a § 125 cafe­te­ria plan in place, con­firm the options avail­able so your deduc­tion agree­ments accu­rate­ly reflect the choic­es avail­able to employees.
  3. Do they address deduc­tions from final pay (e.g., dou­ble deduc­tions)? Cau­tion: Cafe­te­ria plan rules do not allow for dou­ble deduc­tions from final pay in most cas­es, and state wage and hour laws can heav­i­ly restrict this as well.

Align Processes

Care­ful­ly review your elec­tron­ic or online ben­e­fits enroll­ment sys­tems to con­firm the options and lan­guage align with the plan rules, and con­sid­er the following:

  1. If you use a uni­ver­sal enroll­ment form or elec­tron­ic sys­tem, con­firm they con­tain any insur­ance car­ri­er or TPA required arbi­tra­tion or enroll­ment lan­guage, so the elec­tion is con­sid­ered valid.
  2. Put an audit process in place so that, after open enroll­ment, you can con­firm the elec­tions made by employ­ees are trans­mit­ted to the carrier/TPA accu­rate­ly and pay­roll entries are aligned.
  3. Pro­vide employ­ees with a con­fir­ma­tion state­ment that out­lines their final elec­tion choic­es and deduc­tion agree­ments. Also, con­sid­er remind­ing employ­ees to con­firm this state­ment against their first pay­roll of the new plan year to make sure it reflects their choic­es. Both steps can go a long way to catch­ing mis­takes ear­ly, when they are eas­i­est to com­pli­ant­ly correct.

Plan­ning ahead can result in a more effec­tive, stream­lined process for the employ­er and clar­i­ty for employees.

By Eelo­ria Brown

Orig­i­nal­ly post­ed on Min­er­al