Open enrollment can be a time-consuming process, and employees who miss the open enrollment period may be unable to make benefit changes until the next plan year, unless they experience a qualifying life event or another permitted enrollment opportunity. Notably, passive enrollment can be an effective option for employers whose plans have little to no year-over-year changes, enabling employees to retain their current benefit selections without taking additional action.
Active Enrollment vs. Passive Enrollment
A traditional, active enrollment requires employees to manually make benefit elections each year during their designated open enrollment period. With passive enrollment, employees can carry over benefits for the upcoming plan year, and prior benefit elections will automatically roll over. If employees need to change their benefit elections, they can do so the same way they would during an active open enrollment.
Please note: Due to IRS regulations, employees who participate in a Health Care Flexible Spending Account (FSA) generally must make a new election and choose a contribution amount each plan year, even during passive enrollment. Although some plans permit unused funds to roll over (up to the IRS-allowable limit) or offer a grace period, annual FSA elections do not automatically carry over.
The Pros and Cons of Passive Enrollment
Although passive enrollment may simplify the benefit election process for employees who do not need to update their elections, it is important to remind employees to review benefit materials to ensure their current plan is still the best option for them. Employees who experience a qualifying life event—such as marriage, the birth or adoption of a child, or divorce—should review their benefit elections to ensure their coverage continues to meet their needs. Employees who wish to add or remove dependents must make those changes during open enrollment or following a qualifying life event, consistent with plan rules.
Questions?
If you are considering passive enrollment for your organization, reach out to your dedicated Creative Benefits, Inc. team member to decide if this decision is the best for your organization at 866.306.0200.