Once relatively rare, fiduciary liability litigation is on the rise across the country: In 2019, participants in Anthem Inc.’s 401(k) plan reached a $23.7 million settlement in an ERISA fiduciary brea...
HR Administration
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3 min read
In benefits administration, as in life, mistakes happen. In spite of employers’ best efforts to facilitate a successful open enrollment, a few employees will inevitably miss the deadline or accidentally elect the wrong benefits.
While employers may be inclined to allow employees to make corrections, it’s important to be cognizant of the rules for addressing open enrollment errors before making any changes.
In this blog post, we’ll discuss best practices for addressing post-election errors and making midyear changes.
The Logistics of Addressing Election Errors After Open Enrollment
Most employer-sponsored benefits plans renew on a calendar-year basis. Employees are able to change their elections until the start of the plan year, but employers are not typically required to allow changes after the open enrollment period ends.
Most companies set their internal open enrollment deadline well in advance of the plan year for just these administrative reasons. As you can imagine, if employers allowed their employees to revise elections until the start of the plan year, it would be difficult to implement employee elections prior to the plan’s coverage period.
After the plan year begins, employees cannot make changes to their elections even if they made mistakes to their elections during open enrollment.
However, in certain circumstances, employees may be allowed to make changes after a plan renews, such as correcting an error made by a plan administrator or after a qualifying life event.
Employees Can Make Changes to Elections After Qualifying Life Events
If an employee inputs the wrong information during open enrollment, they may be able to correct the error after the plan year begins if they experience a qualifying life event and the election change is related to that event. Examples of qualifying life events include:
Marital status changing—This would include circumstances of employees getting married or divorced, separating, or a spouse passing away.
Number of dependents changing—Employees who experience a birth, an adoption, or the death of a child may change their elections later in the year.
Dependent status changing—If an employee’s child becomes eligible for dependent status during the year or ages out of dependent status, the employee is allowed to change their elections.
Change in employment—Employees who start a new job, quit, or transition to part- or full-time status are allowed to make midyear election changes.
Residence change—An employee moving to a different zip code or county may qualify as a life event if it changes an employee’s health plan area.
Losing health coverage—Employees who lose their existing health coverage or whose benefits eligibility changes may make changes to their elections.
Tips for Establishing Open Enrollment Best Practices
Employers and HR leaders can help employees minimize the risk of election errors by facilitating a smooth open enrollment with clear instructions and plenty of communication about upcoming deadlines.
- Encourage employees to enroll with plenty of time to spare, since rushing can increase the chance of errors.
- Make plans to communicate early with employees about open enrollment and benefits offerings, using multiple communication platforms.
- Offer benefits education and resources leading up to and during open enrollment to help employees understand their options and reduce the risk of errors.
- Establish and enforce hard open enrollment deadlines, after which employees aren’t permitted to make changes.
- If you do decide to allow post-open enrollment changes, consider establishing an outer limit, such as two weeks before the start of the plan year, after which you will not accept further changes.
Health benefits administration is a complex task. Understanding when employees can make post-election corrections enables employers and HR leaders to avoid potential violations.
SWBC’s Employee Benefits Consulting Group provides high-level claims advocacy, creates custom employee educational materials, and negotiates the most affordable plan premiums on your behalf. Our benefits experts can save you time by assisting you with all aspects of your benefits program—ultimately saving you money.
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