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What Is Open Enrollment for Health Insurance?

Donna Fuscaldo
Donna Fuscaldo

Open enrollment for health insurance has been tougher during the pandemic. Here's what you need to do to make it a success for your company this year.

  • Open enrollment for health insurance is the annual period when employees have to choose their coverage for the coming year.

  • It's important for employers to shop around before choosing which health plan or plans to offer workers.

  • The pandemic makes open enrollment tougher, with many employees working from home.

  • This article is for small business owners and human resources professionals who offer health insurance to their employees.

It's that time of year again – time for small business owners to present health insurance plan options to their employees. Known as health insurance open enrollment, it's the period employees have to opt in to a company-sponsored health insurance plan or make changes to an existing one. With open enrollment quickly approaching, you should have a good idea of what it is and what occurs during it.

What is open enrollment in health insurance?

Health insurance open enrollment is the window in which employees can sign up for healthcare coverage, make changes to their plans, or drop out. This period is typically 30 to 45 days. Within this timeframe, employees fill out an open enrollment application that officially records their health insurance selections.

If an employee doesn't sign up for health coverage during the open enrollment period, they typically have to wait until next year to get health insurance. There are some exceptions to the rule.

For 2021 health insurance, the open enrollment period is Nov. 1 through Dec. 15. That's when most companies and health exchanges offer access to health insurance. Small businesses don't have to follow that schedule, but many do. [Read related article: Small Business Guide to Health Insurance]

Key takeaway: Open enrollment is a 30- to 45-day period in which employees can sign up for individual and company-sponsored health insurance.

Why does open enrollment in health insurance exist?

Whether you're offering employees a health insurance plan or they're buying it directly from an Affordable Care Act health insurance exchange, people can only opt in during open enrollment. That rule is universal across the board, with the aim of preventing individuals from signing up for health insurance only when they're sick, which is known as adverse selection. If this were allowed, someone who is never ill would never get coverage, increasing the risk health insurers must shoulder. To counter that, industry players joined forces to create open enrollment periods for health insurance.

Key takeaway: The open enrollment period exists to prevent people from buying insurance only when they get sick, which creates too much risk for insurers to bear.

What types of health insurance have open enrollment?

Three types of health insurance have an open enrollment period, with varying deadlines.

The open enrollment period for federal and state marketplaces for 2021 is Nov. 1 through Dec. 15 of 2020. Individuals and business owners can shop the exchanges online, by phone, directly through the carrier, or with the help of a broker.

Employer-sponsored health insurance also has open enrollment. The fall and end of the year are common times for employers to hold open enrollment. However, new businesses, or businesses that have never provided health insurance before, can start offering it any point in the year, with open enrollment typically lasting 30 days prior to renewal. Small business owners can purchase health insurance for themselves and their employees through a broker, directly from the carrier, or through an online marketplace.

Medicare recipients can opt in to insurance between Oct. 15 and Dec. 7 every year, which is the standard Medicare open enrollment period. They have options to change benefits at different points throughout the year.

Key takeaway: The open enrollment period varies by type of health insurance. The enrollment period for individual insurance available from state and federal marketplace exchanges is Nov. 1 to Dec. 15. Small businesses can begin a plan at any point in the year.

What happens if you miss open enrollment?

Employees who miss the deadline to enroll in health insurance will have to wait another year to enroll, unless they have what is known as a qualifying life event. This could be a marriage, the birth of a child, the death of a family member, or a divorce. Any of those events enable an employee to enroll in the health insurance plan or make changes to their plan outside of the open enrollment period.

Key takeaway: If an employee gets married, has a baby, experiences the death of a close family member or gets divorced, they can enroll after the enrollment period expires.

How do you choose a health insurance plan?

Health insurance changes from year to year. Doctors are added and dropped, the covered medications change, and premiums increase. A health insurance plan that was great last year may not be so wonderful the next year. It's incumbent on business owners to find the right plans to offer employees. Your current plan may still be the best, but you won't know until you do some comparison shopping.

Anthony Lopez, vice president of Medicare retention for eHealth, said that while you don't need to change plans each year, it's best to at least shop around and compare premiums and benefits.

"I have some customers who've been with the same carrier for 10 years and some customers who change every year," Lopez told Business News Daily.

When shopping for plans, consider changes in coverage and premiums as well as the current needs of your staff. If you have more parents on the team in 2021, for instance, you may prioritize certain benefits over others. The COVID-19 pandemic complicates coverage, so you should factor it in when choosing your plan features.

"There's a lot of different coverage coming out of the industry due to COVID, which has quickly turned into a mental health crisis as well as a financial crisis," said Misty Guinn, director of benefits and wellness at Benefitfocus. She pointed to telehealth as an area insurance providers are focusing on for 2021.

"We'll also start to see even more high-deductible health plans as employers figure out the financial impact of the coronavirus," Guinn said. High-deductible health insurance plans tend to be cheaper for small business owners to offer, as more of the cost shifts to the employee.

To ensure the health insurance meets everyone's needs in your company, it's a good idea to choose more than one plan. Pat Quinn, CEO of UnitedHealthcare Missouri & Central Illinois, encourages employers to consider offering more than one plan with different levels of deductibles and coinsurance amounts.

Key takeaway: It's important to shop around for health insurance for you and your staff. Consider any changes in premiums, coverage, providers and the situations of your employees. The pandemic is making things like telehealth a more important benefit.

How does open enrollment work for a business?

The goal of open enrollment for a business is to inform employees of their options so they can make sound decisions about their healthcare coverage. It's also designed to get as many employees to sign up as possible. Here are several steps to make your company's open enrollment period a success.

  1. Devise a plan. Decide how you'll get the word out about open enrollment and changes in the health insurance options. The more knowledge employees have, the more likely they are to enroll. Be sure to consider workplace conditions during the pandemic.

  2. Create your marketing materials. Be it email, videos, podcasts or text messages, you want to prepare all the messaging well ahead of time. Take pains to spell out all the changes and highlight key features of the plan.

  3. Get supporting documents out there. Whether you plan to mail the plan information to employees' homes or send out a PowerPoint presentation by email, you have to figure out how you'll disseminate plan information.

  4. Schedule one-on-one meetings. You'll want to schedule time with employees to answer any questions. That could mean a quick Zoom conference or phone call.

Key takeaway: A successful open enrollment period requires you to devise a plan, consider your messaging and how you'll get it out to employees, and answer any questions your employees have.

How should you communicate open enrollment to employees?

Communication is key to maximize your success with open enrollment. It falls on the business owner or plan manager to make the information available, emphasizing any changes. If there's a price increase this year, lay out how you and your employees will share in that.

It's important to communicate clearly and often. Employees have a short window of time to add insurance for the coming year. If they miss the deadline, they could be uninsured for an entire year. You should communicate often during open enrollment, using a variety of methods to spread the word. You may not be able to hang flyers throughout the office or drop the health insurance plan documentation on employees' desks anymore, but you can use email, video and texting to get employees engaged and signed up.

At Benefitfocus, Guinn opted for podcasts as one way to promote open enrollment and the health insurance plans on offer for 2021. Broken down into 18 different sessions, the 10- to 15-minute podcasts tell the stories of how different benefits improved people's lives. The idea was to get people away from their screens and moving while they listen to the plan information. This is just one way Guinn is reaching employees during open enrollment.

"We've tried to hit them on all areas," she said. "We're sending text messages reminding people, sharing links to our podcasts, and mailing out a benefits guide."

Key takeaway: Communication is the most important aspect of successful open enrollment. Companies can use various means to inform employees of plan changes and deadlines, including podcasts, text messaging, videos and good old-fashioned mail.

Image Credit: Alexander Shelegov / Getty Images
Donna Fuscaldo
Donna Fuscaldo,
Business News Daily Writer
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A lifetime New Yorker, I am a veteran finance and business journalist that has contributed to several national media outlets including Forbes, Investopedia, and Bankrate.com. I have spent my career providing consumers and business owners with advice and guidance to help them navigate the world of finance. As a senior finance writer, I report on all aspects of finance from managing cash flow to choosing the best accounting software.