Designing enrollment plans for your employees can be tricky, but it doesn’t need to be when you have the right support. To help you get started, read on to learn about the different options available when designing your health plan enrollment.
At Beckham Insurance Group, we offer several online benefit enrollment systems. With progressive technology and high-level customer service, our team navigates the complicated world of group health insurance for you! To learn more about our online enrollment services and receive a free quote, contact us today.
When Can Employees Enroll?
Enrollment periods are the two times of the year when employees can choose new healthcare coverage. The first enrollment period is during an employee’s initial onboarding; the second enrollment period is your company’s annual enrollment. Additionally, life-changing events can also qualify employees to change their elections outside of these timeframes.
During an employee’s initial onboarding, some employers may require waiting periods before admitting a new hire into their company’s group health insurance plan. This evaluation period typically lasts 30 to 90 days and represents the time that employees work without coverage until they meet the plan’s eligibility requirements. Under the ACA, this period must not exceed ninety days.
During annual enrollment, employees have the opportunity to make changes to their coverage elections. While federal laws don’t require that this period cover a specific amount of time, many employers choose 30 to 90 days for their open enrollment period. If an employee denies coverage during this time, they must wait until the next annual enrollment to receive coverage—unless a qualifying life event occurs.
Qualifying Life Events & Midyear Changes
If a qualifying (life-changing) event occurs, employees are eligible to enroll in coverage. HIPAA requires that if a certain special event occurs, group health plans must provide an enrollment opportunity. These events include marriage, termination of Medicaid or CHIP eligibility, a new dependent, and loss of healthcare coverage. Each event comes with specific election rules that dictate how to handle each situation along with what requirements must be met to qualify for special enrollment.
When Do Elections Take Effect?
Generally, elections under a Section 125 plan are effective on a proactive basis. In other words, the elections that your employees make during open enrollment take effect for the upcoming plan year. For many reasons, it’s wise to end enrollment periods well in advance of your plan year. By doing so, this grace period gives you time to confirm elections, process enrollments, and perform preliminary non-discrimination testing under Section 125.
What Methods Are There for Making Elections?
Health plan sponsors have a few different options when choosing their election method. The three main methods include affirmative elections, default elections, and rolling elections.
- Affirmative Elections: Employees complete an agreement to participate in the plan. In other words, they select the coverage options that they would like to use. If an employee fails to make elections during the enrollment period, they will automatically be opted out of coverage.
- Default (Automatic) Elections: Employees are automatically enrolled in your healthcare plan unless they complete a waiver or opt out of coverage.
- Rolling Elections: Current participants automatically continue with their existing elections into the next plan year ahead. Unless an employee chooses to opt out or elect a different level of coverage, the benefits that they originally selected roll into the next plan year.
Although affirmative elections are the most popular method, the IRS has confirmed that employers may use default elections or rolling elections under a Section 125 plan.
Who Needs to Provide Coverage
An employer with more than 50 employees, otherwise known as an applicable large employer (ALE), is required to offer their full-time employees (30+ hours a week) affordable coverage.
The requirements listed below are to be used as general knowledge and are by no means all-inclusive. If you’re looking to ensure that your business is ACA-compliant, contact our team at Beckham Insurance Group to learn more about our ACA-compliant resources and legal counsel.
Minimum Coverage Requirements
For coverage to be considered “affordable”, it must provide minimum value for the employee. Minimum value means that the coverage plan provides at least 60% of average medical costs for a standard population and provides “substantial coverage” for inpatient care and physician services. Keep in mind that minimum value is not the same thing as minimum essential coverage, but all employer plans are considered minimum essential coverage, regardless of the benefits they provide.
Timing for Enrollment Periods
Under The Affordable Care Act (ACA), applicable large employers (ALEs) must provide an annual enrollment period to avoid triggering penalties under employer-shared responsibility provisions. Final regulations issued by the Internal Revenue Service (IRS) explain that ALEs are required to provide full-time employees with at least an annual opportunity to accept or decline coverage under the plan. ALEs that only provide employees with one chance to elect coverage (sometimes referred to as “one bite at the apple”) violate the ACA’s offer of coverage requirement.
Non-ALEs are not subject to the ACA’s annual offer of coverage requirement, but they may still be required to provide an annual open enrollment period under their contracts with health insurance carriers or the terms of collective bargaining agreements. Also, if an employer allows employees to make pre-tax contributions under a cafeteria plan, the Section 125 rules expect that participants will be given a period to make their elections each year.
In addition, if an employer’s health plan does NOT meet the ACA’s affordability or minimum value requirements, employees must have an effective opportunity to decline the coverage at least once per year. By declining this type of health plan coverage, employees can retain their eligibility for a premium subsidy under the ACA’s Exchanges.
Beckham Insurance Group Has You Covered
There is a lot to consider when it comes to health plan enrollment for your employees. Ensuring compliance and meeting legal requirements can feel overwhelming, but it doesn’t need to be when you have the right HR support. At Beckham Insurance Group, we are proud to serve the businesses of Charleston, SC, and St. Simons Island, GA. As one of the leading employee benefits brokers in the Southeast, our team navigates the complicated world of employee benefits for you.
Online enrollment, legal counsel, and ACA seminars are just a few resources and tools that keep our customers ahead of the game. To learn more about our benefits programs and other HR solutions, contact us today!