What is it?
Open enrollment is an annual period when an individual or employee can add, drop, or make changes to their medical, dental, and vision insurance. It is also an opportunity for those with employer-sponsored insurance to sign up for other employer-sponsored benefits. It usually lasts between two and six weeks and often occurs in the fall, but some employers have different open enrollment periods.For employer-based and individual coverage, open enrollment is the only time one you switch or sign up for a new health insurance plan. The exception is if you qualify for a Special Enrollment Period (SEP) triggered by a Qualifying Life Event (QLE). For employer-based coverage, open enrollment is usually the only time you can drop coverage. For individual marketplace coverage, you can drop coverage at any time of the year.
What does it include?
Data shows that 80% of Americans spend less than an hour researching one of the most important decisions they’ll make all year: their health coverage. Because researching healthcare options can feel like a chore, during open enrollment, roughly 90% of Americans choose the health plan they had the previous year, despite any changes in health.During open enrollment you will make choices about what plans work for you covering medical, dental, and vision insurance coverage, as well as potentially opening a tax-advantaged savings account, such as a health savings account or flexible spending account.
During open enrollment you will be able to choose between plans for medical insurance that best suit your needs, and the needs of your family. These plans can include:
A Preferred Provider Organization or “PPO”, which refers to the network coverage your health plan gives you access to. If you get your healthcare with providers who are in the network of plan, you pay less than with providers outside the network. However, you may still get some coverage with out-of-network providers.
A High-Deductible Health Plan or “HDHP”, often cheaper than a “traditional” health plan which often features lower premiums, full coverage for preventative care, and minimum deductibles and out-of-pocket maximums set annually by the IRS. These can be paired with a health savings account to help offset the costs and provide additional tax savings.
Health Maintenance Organizations (HMOs), a type of health plan that offer lower premiums, lower deductibles, and a more limited network of healthcare providers. Often HMOs consist of a network of providers limited to one geographical area or company.
Dental and vision
You will also have an opportunity to choose additional plans, such as dental and vision coverage. Similar to health insurance, you may have a variety of plans at different prices to choose from, which will give you access to different levels of care and different networks of providers. Vision insurance may include a certain amount of money towards new glasses or contact lenses each year.
HSAs and FSAs
HSAs and FSAs are both tax advantaged accounts that enable you to set aside pre-tax money to pay for qualified healthcare expenses. While they both enable you to save money on medical-related expenses, they have different requirements.
A Health Savings Account is a tax-exempt financial account that you can use to save for and cover the cost of eligible medical expenses. To be eligible for an HSA you must have a high-deductible health plan. HSAs are portable and never expire, meaning you can take them with you if you switch employers and health insurance providers and the balance rolls over year-to-year. Contribution limits for HSAs are set by the IRS each year. To see how much you can save on taxes and healthcare spending, use our HSA savings calculator.
A Flexible Spending Account works with any health plan and is offered through your employer. Employees can contribute pre-tax dollars from their paycheck to these accounts in order to pay for medical care, supplies and other services. There are three different types of FSAs, which can be used for different purposes:
Employees must use their FSA money within the calendar year. The IRS sets contribution limits for FSAs each year. Use our FSA savings calculator to see how much you can save on your taxes and healthcare-related expenses with an FSA.
To see what expenses are eligible for coverage or reimbursement from your HSA or FSA Use our interactive, searchable database.
Details for individuals and employees
Whether you get coverage from your employer or purchase it from the health insurance marketplace, knowing when your open enrollment period is and having a plan on how to approach it is important. Even if you want to keep your same coverage, it’s important to review your plan and options, because your plan may have changed, including cost, network of doctor’s, and prescription drug coverage. Below we outline important factors to keep in mind before, during, and after open enrollment.
What are the dates?
It’s important to know when your open enrollment period is because if you miss the window to sign up for or change your benefits you could be without insurance, or have coverage that doesn’t match your needs, for another year. Health insurance companies require a specific sign up period to counter adverse selection - the tendency to only buy insurance when you are sick and forgo it when you are healthy.
If you get your insurance through your employer, ask your HR leader about open enrollment dates. Most schedule open enrollment in the late fall, commonly starting November 1. However, dates and the length of the open enrollment period varies by employer.
Open Enrollment begins November 1
Enroll by December 15 for coverage that starts January 1
Open Enrollment ends January 15
However, states with their own exchange can have different open enrollment dates, so be sure to check what applies to your specific state.
In addition, you can apply and enroll in Medicaid or the Children's Health Insurance Program (CHIP) any time of year.
What is a qualifying life event?
There are a few exceptions when you can change or update your health insurance plans or coverage, which are referred to as a “Special Enrollment Period.” These can include:
Birth or adoption of a child
A death in the household
Changes in residence (e.g. moving zip codes, leaving incarceration, moving to or from a shelter to or from traditional housing)
Loss or change of employment,
Loss of health insurance
Becoming a US citizen
Changes in your income that affect the coverage you qualify for
Gaining membership to a federally recognized tribe
These are often referred to as a “qualifying life event.” Some benefits, like a Health Savings Account, can be opened at any time during the year.
As open enrollment approaches take time to consider your healthcare needs and any upcoming changes. Will you be experiencing a major life event, like starting a family, getting married, or moving? Will you need a different type of coverage in order to meet you changing needs?
Also think about whether you used your current plan this year. How much did you use your insurance coverage? Were you happy with the doctors you had access to and the level of care you received? Is what you’re paying for coverage now working for your budget? Assessing what you need from your coverage will help you make the best choice of care for you.
Use our calculator to compare health insurance plans and figure out what type of plan is right for you and your needs.
Best ways to prepare
To make sure you’re prepared for open enrollment follow these five steps:
Make a plan: Understand your benefit options and when the period starts and ends.
Know what’s changed: Costs, such as deductibles and copays, your network of doctors, and prescription drug coverage all may have changed this year, even if the plan name and administrator are the same.
Define what you need from your healthcare coverage this year and take into account any major life changes.
Compare plans to find one that can better suit your needs.
Consider additional benefits that support financial wellness and help reduce costs, like an HSA.
Overall, open enrollment means options. It is an opportunity to ensure that you have the healthcare coverage you need, are prepared for the unexpected, and can take advantage of all of the benefits your employer may offer.
Important open enrollment terms
There are many healthcare terms that are crucial to your understanding of healthcare plans and are important to be familiar with when considering healthcare options during the open enrollment period. Being familiar with some of this vocabulary can help you better review, compare, and select health insurance plans during open enrollment season. For a more complete list of terms and definitions, read our Glossary of HSA and Healthcare Terms.
Plan start date: Open enrollment has begun, but that doesn't mean as soon as you sign up for health insurance, your plan will start. Your effective plan start date is when your coverage begins. Make sure you understand when your coverage begins so you don't get stuck with a medical bill and no insurance to help you cover the costs.
Monthly premium: These are the monthly set costs for your health insurance coverage. It is likely the easiest part to understand in this process.
Co-pay: These costs are typically associated with PPO plans. They are the set costs, designated by your insurance provider for service. They are also often required at time of service.
Coinsurance: This is the amount that you pay as a percentage (%) of the total cost of service. Your insurance plan will cover the rest.
Deductible: Deductibles are set yearly amounts that individuals (and families), must meet before their insurance coverage begins. This is crucial to understand because even though you are paying a monthly premium on day 1, until you meet and exceed your deductible limit, you are still responsible for 100% of your health costs.
In-network vs. Out-of-network: From a technical perspective in-network providers have contracted rates with your insurance company, while out-of-network do not. For you (or your family), this likely means different coverage levels and costs (typically higher for out-of-network providers and services). Make sure you double check that your primary care doctors (and even specialists) are included in your list of in-network providers (or plan for the expected higher costs accordingly).
Annual out-of-Pocket maximum: This is the maximum amount you could pay in the plan year. In the case that you have a large medical cost, this maximum limits your total payment requirement (and risk). After you meet this maximum, your insurance company will pay the rest of your qualified medical expenses. This is a key insurance parameter to limit your financial exposure.
Qualified medical expense: Understanding what procedures, prescriptions, and related health costs are covered as part of your plan can drastically alter the value it provides for you. These lists can be long and cumbersome and can even set limits on the total expenses per category (like physical therapy visits for example). While it is hard to plan for unexpected costs, comparing your expected procedures and expenses for the next year, can help you understand any additional out-of-pocket expenses you might incur. In addition, under IRS regulations eligible qualified medical expenses can be used for your FSA or HSA tax-free dollars. Lively has compiled a full list of HSA abd FSA eligible expenses to search, review, and purchase via the HSA or FSA store.
Details for employers
It’s critical for employers to get open enrollment right. On average, employees only spend 18 minutes enrolling in benefits each year, and that’s without factoring in the unprecedented pressure the ongoing pandemic and worries about inflation has placed on employee time and attention spans. However, 70% of employees rank healthcare as one of the most important benefits employers can offer according to Lively’s Wellness and Wealth Report. As a result, driving employee engagement during open enrollment is crucial.
Open enrollment is a busy time for employers, especially for HR departments and benefits administrators. It can also be overwhelming for employees. Because getting the right mix of benefits, and ensuring employees sign up for them is critical for recruiting and retaining employees, we’ve compiled the resources you need to ensure a successful open enrollment.
When do most companies schedule enrollment?
For health plans starting on January 1, most employers schedule their annual open enrollment towards the end of the calendar year, often in November. However, for companies with fiscal years that start on different date, they may choose a date closer to the end of their specific fiscal year.
New hires are often able to sign up for health insurance when they join a company, outside of open enrollment, though some may have a 30-to-90 day waiting period before health coverage begins. Employees that experience a qualifying life event can change their coverage outside of open enrollment.
How long does it last?
Generally open enrollment lasts between two to six weeks. Employers must ensure that employees have enough time to review their options and ask questions, but the time period must be short enough to ensure employees take action and don’t forget to enroll in benefits coverage.
Best practices for employers
Employers must begin planning for open enrollment several months in advance. Planning ahead ensures that you are prepared to support employee engagement and are offering your employees the best benefit options. For detailed information and open enrollment checklists, download our Open Enrollment Survival Guide.
Mid-year, before open enrollment:
1. Assess your current benefits offering
What are employees using the most? The least?
Survey employees to ensure your benefits are offering the flexibility, choice, and the ability save employees need
Review plan performance from your benefits providers in order to make informed decisions
2. Adjust your benefits offerings
3. Drop options are ineffective low popularity benefits options
What can employers do to prepare?
Break your open enrollment planning into three phases and set measurable goals for each to ensure employees get the most out of open enrollment:Before
Create an employee communications plan
Meet with your benefits broker and schedule time for them to talk with employees
Create an internal website or folder to drive employees to a centralized source for information
Send out open enrollment preview communications to highlight new options, plan changes, and sign up for information sessions
Position benefits as resources for employees
Send regular communications through multiple channels to drive engagement and action
Make an employee to do list
Host regular, virtual information sessions and drop-in virtual office hours
Host an employee “Ask Me Anything” with your benefits provider
Survey employees about what worked and what did not
Hold retrospective meetings and discuss:
Is employee use of benefits increasing or decreasing?
Are employees and employers saving more money than last year?
Provide annoying education so employees can access and maximize their benefits
For a printable checklist to make your open enrollment planning easy, download our Open Enrollment Survival Guide.
For detailed communications plans, email templates, shareable infographics, and explainer videos visit our employer open enrollment resource center.
How can offering an HSA or FSA drive engagement and reduce your tax burden?
Adding an HSA or FSA to your benefits offering during open enrollment can help your employees get the most out of their health insurance and save you money in the process. Both employer and employee HSA contributions made from payroll are FICA tax exempt, so you benefit from tax savings for every contribution. You can use our savings calculators to see how much both you and your employees can save with these tax-advantaged accounts.
If you’d like guidance on adding an HSA or FSA to your benefits package, reach out to us at Lively.
Details for brokers
Employers of all sizes rely on benefits brokers and consultants to be their partners as they try to do more with fewer resources, while driving employee recruiting and retention. Employers are increasingly leaning on their vendors as experts in the field who can not only help them choose the best options for their employees, but can also support the execution. In fact, a recent study found that 83% of brokers are being asked to help contain healthcare costs and 71% have clients struggling with employees’ dissatisfaction with their benefits.
By planning ahead brokers can ensure they are prepared for open enrollment and can support their clients and help drive their success. For checklists, information, and ready-made communications plans to share with your clients, download our Open Enrollment Survival Guide and visit our Open Enrollment Resource Center.
How to ensure success
We put together these five steps to help you get ready for open enrollment and ensure you have everything you need for a successful season.
1. Evaluate your processes and your experience last year
What worked? What feedback did you receive from clients that you can implement to improve your process?
How can you improve communication with clients, more efficiently answer frequently asked questions, and reduce repetitive tasks?
What feedback have you received from your clients about their benefits offering? Are there new platforms that may be a better match for them?
2. Ensure you are up-to-date with the latest insurance changes and benefits trends
Clients are relying on your expertise to help them navigate a confusing and increasingly complex and expensive healthcare landscape.
Research insurance rates, any changes to the plans you offer in your geographic area, and healthcare legislation.
Identify new benefits trends and add offerings that your clients may be requesting that could respond to current employee needs.
3. Meet with your existing groups
How have their needs or business changed in a way that warrants a shift in benefits offering?
Are they adding or reducing headcount?
Opening a new location?
4. Record your data
Ensure you keep records of all the information you get from your clients so you can make the best recommendation.
5. Quote and help your clients finalize their offerings
Present your quotes and supporting information to your clients and ensure all the plan options you're sharing meet ACA requirements and state and local ordinances.
Once your offerings are finalized, collaborate with your clients to provide employee education to support engagement and benefits adoption.
How to support your clients
Open enrollment is a busy time for both brokers and their clients. By supporting your clients during this hectic time of year you are making yourself more valuable to them and it’s an important touch point in your relationship. To ensure your clients are getting the most out of open enrollment, and the plans that you put together, take the follow steps:
1. Plan ahead
Make time to meet with your clients ahead of time and review their open enrollment plans and identify ways you can support them and resources you can provide to make the process more efficient.
2. Offer multi-channel communication resources
Employees all have different learning styles and process information differently. To help your clients best education their employees about their benefits options give them access to materials, help them develop their internal benefits presentations, and help them to create a communications schedule that will keep benefits interesting and top-of-mind but doesn’t inundate employees with too much information. You can also use Lively’s Open Enrollment Resource Center for materials to share.
3. Focus on customer service
Just like the benefits plans they offer, your clients expect a prompt, helpful response from you when they have a question or concern about their benefits offerings. Ensure you focus on answering their questions personally and promptly and point them towards any further resources that might help address their issue even faster in the future.
4. Make benefits selection and implementation easy
The health insurance and benefits landscape is constantly changing and it’s impossible for employers and employees alike to stay on top of it all. You can be a trusted partner to your clients by using your expertise to not only help employers make good decisions, but to communicate those decisions to their employees and support their employees health, wellbeing, and productivity.
Get started with Lively
If you are looking to offer a highly-rated HSA or FSA this season, Lively can help you meet your needs and those of your employees and clients. Lively’s easy-to-use platform, top-rated mobile app, and straightforward integrations can ensure that you can get up and running in weeks, not months. Our dedicated customer service team is also with you every step of the way. Reach out to us or learn more about our HSA accounts to get started with Lively.
Disclaimer: the content presented in this article are for informational purposes only, and is not, and must not be considered tax, investment, legal, accounting or financial planning advice, nor a recommendation as to a specific course of action. Investors should consult all available information, including fund prospectuses, and consult with appropriate tax, investment, accounting, legal, and accounting professionals, as appropriate, before making any investment or utilizing any financial planning strategy.
Frequently Asked Questions
How much can I contribute to a health FSA?
Flexible Spending Account contribution limits are set annually by the IRS. In 2022 the limit is $2,850 and in 2023 the limit is $3,050 but an employer can choose to set a lower limit. Both an employer and employee can contribute to an FSA.
Unlike a Health Savings Account, there are no family contributions. However, both spouses or partners can have individual FSAs eligible up to the annual maximum contribution limit each or up to their respective employers’ set limits. On top of that, employers can match employee FSA contributions. Employers may contribute additional funds up to the annual limit per individual FSA account. There are some complexities here (for example, what an employer can match if the employee contributes less than $500 dollars). See full details here.
What can I use my FSA funds for?
Employees can use FSA funds to pay for any medical related expenses like copays, deductibles and other out-of-pocket costs. See full list here. Unlike a Health Savings Account, the full FSA fund amount is available for use on the first day of the plan year, rather than accumulating throughout the year.
How is my FSA funded?
FSAs are funded through payroll deductions. The full amount of our FSA is available immediately at the employees plan start date. The employer then deducts the contribution amount that the employee elects from the employee's paycheck.
What does it mean to substantiate an expense?
FSAs require that every expense is approved by the plan sponsor (typically your employer). This is because your employer is putting in place a plan that walks through all eligible expenses that the plan is allowed to pay for.
If you (as the employee) are utilizing pre-tax FSA funds on expenses that are not approved by the IRS, your employer could face penalties and fines by the IRS for non-compliance. As a result, if they can’t, with confidence, know that you spent your funds on qualified medical expenses, they will ask you for further documentation or proof so that the use of those funds were “substantiated”. This is what gives them the protection they need in case of an IRS audit.
Is an FSA tax-free?
Yes, employees elect how much to contribute into the account at the beginning of each plan year. Then, the total annual amount is deducted from the employees’ paycheck equally throughout the year. Any employer contributions are also tax-free.
Who can enroll in an FSA?
Most full-time employees are eligible to enroll in their employer’s FSA. An employee does not need to enroll in the employer’s healthcare to be eligible to enroll in their FSA. An FSA is not a healthcare plan but can be used in conjunction with a healthcare plan in the US.
Do my FSA funds rollover at the end of the year?
After year-end, any money left over in an employee FSA will be turned over to the employer with three small exceptions (these are are at the discretion of the employer):
: An additional two and a half months (until March 15th assuming a plan year that starts on January 1st) is granted to the employee for any new expenses that can be used from money in the FSA from the prior year. After the grace period, any remaining money will be turned over the employer.
: Employees can roll over a maximum of $570 (in 2022) and $610 (in 2023) from plan year to plan year if allowed by his/her employer. Any additional dollars above the roll over maximum will be forfeited. Please note, any funds that are rolled over from the previous year do not count towards the current year pre-tax contribution limit set by the IRS.
: This is the additional time, after the plan year ends, tha an employee can file a claim that occurred in that plan year.
An employer can only provide one of these two options (grace period or carry-over) at the end of the year - not both.
What happens to my FSA if I leave my job?
Once an employee leaves a job, any unused FSA funds will be returned to the employer. However, employees will have 90 days to submit any outstanding FSA eligible expenses.
What are Medical (Healthcare) FSA, Limited-Purpose FSA and Dependent Care FSA?
Medical (aka Healthcare) FSAs help employees pay for eligible medical, dental and vision expenses their insurance plans don’t cover. Unlike HSAs, FSAs don’t need to be paired with a specific health insurance plan, which is good news as employees have more freedom to choose the health plan that works for them.
Limited-Purpose FSAs can only be used for dental and vision expenses that employees’ health plans don’t cover. The rules for these accounts are similar (but not exactly the same) as the Healthcare FSAs. One of the major benefits of this FSA? You can contribute to a Limited-Purpose FSA and a health savings account (HSA) at the same time with no penalties.
A Dependent Care FSA is offered by employers to help employees save and pay for child and dependent care. It's meant to help employees pay for services that allow them to work when they would otherwise need to be at home fulfilling caretaking duties.
How is an FSA different from an HSA?
While both accounts can be used for qualified medical expenses, there are significant differences. A Flexible Spending Account (FSA) is fundamentally different from a Health Savings Account (HSA).
An FSA is a “use it or lose it” spending account, meaning you have a limited amount you can contribute each year, but if you don’t use the money in it, you will lose the ability to use it later (subject to limited carry forwards and a grace period). With an FSA, the account is also not yours, it is your employer’s. Additionally, you have to make an election at the beginning of each Plan Year to determine how much money you want to put away. An FSA can be used with almost any type of health insurance (low or high deductible).
An HSA on the other hand is your account and it is portable. Meaning if you decide to leave your employer, you can take all of the money in your account with you. You can also rollover your balances year-to-year, so there is no concept of “use it or lose it”. The contribution limits are also higher with an HSA versus an FSA, and you can make adjustments throughout the year. In addition to helping you save on qualified expenses, an HSA also accrues interest tax-free, and the funds can even be invested tax-free. Contributions to an HSA can only be made with an active qualifying Health Deductible Health Plan.