The CEO’s Guide to Open Enrollment: 5 Things You Need to Know

Business leaders across the country are preparing for the next phase of the Affordable Care Act that’s set to roll out in 2015: the employer mandate.

The new law stipulates that employers with 50 or more full-time employees must provide affordable health insurance coverage for their staff or face fines and penalties. For businesses that don’t already offer employer-sponsored insurance coverage, this year’s open enrollment period will be vital to their companies’ financial planning and stability.

Affordable Care Act and Small Business

CEOs of companies offering healthcare coverage need to be educated about the open enrollment period and process and become aware of how this transition can affect their businesses in the long run. Planning for the open enrollment period can save your company money, reduce stress, and prevent common mistakes.

What You Need to Know About Open Enrollment

Open enrollment is a period when employers must educate employees about the group benefits and insurance plans available to them. During this time, employees can explore their coverage options, add, alter, or end certain plans, and ultimately sign up for employer-sponsored coverage or find an alternative form of coverage.

To comply with the Affordable Care Act, companies must offer employer-sponsored insurance to all of their employees this year. Because employees are also required to have insurance, employers are experiencing significant increases in cost. Managing these increases in cost requires the CEO to think differently about insurance. Here are some questions to consider:

How much will this cost?

ACA compliance will increase costs, especially for those businesses with large low-wage workforces. If a business has more than 200 employees, employers will be required to automatically enroll their employees in the company health insurance plan. This study, released by the American Health Policy Institute, suggests that the impact on U.S employers could amount to nearly $6,000 per employee.

Does this have value for employees?

Studies have shown that providing healthcare can boost employee performance and productivity. Choose coverage that will be valuable for employees’ specific state of health or stage in life when vetting potential plans.

Will my company be compliant with the law?

To be compliant, companies must offer health insurance to all full-time employees who work more than 30 hours per week. Employers need to track all employees’ hours to assess which workers are considered part-time or full-time for the purposes of compliance. Employers then need to make offers of insurance to all full-time employees and properly document that offer.

How do I know whether I’m getting good advice about offering ACA-compliant insurance to my employees?

First, your advisor should provide you with a way to track the time status of full- and part- time employees. Second, you should be presented with at least one valuable option you haven’t been presented with in the past — you shouldn’t be paying for knowledge you already have.

Third, make sure the possibility of not offering insurance and allowing your employees to go to the exchanges has been explored. Finally, for those considering self-insurance, you must consider the adverse selection risk associated with not migrating your low-income employees to Medicaid.

How CEOs Can Plan for Open Enrollment

As open enrollment approaches each year, CEOs must clearly understand what their companies will be offering and how they should inform employees of their options. Here are five key steps CEOs should take to prepare for open enrollment:

  1. Ask around. Talking to other CEOs about what they’re doing and how they cut their insurance costs is a great way to piece together a solid plan that works for your company. Listen to every reasonable idea, and when you’re ready, present them to your broker.
  2. Consider your options. Look into options such as self-insurance, PEOs, and public benefits enrollment to help lower costs. Also, look into how wellness programs and features such as telemedicine could enhance employee health and save money.
  3. Offer Medicaid education and assistance. Inform employees about Medicaid eligibility, help them locate more information, or provide assistance in completing an application. Qualifying employees who opt to enroll in Medicaid instead of your company-sponsored insurance will provide significant savings for your company.
  4. Determine whether your company should offer insurance to family members. Talk to your broker about your options and the associated costs of offering different levels of coverage to the spouses and children of your employees. If you choose not to offer family coverage, provide low-income employees with information about Medicaid and your state’s Children’s Health Insurance Program (CHIP) to help them get their families covered.
  5. Educate employees ahead of time. Your last step is to develop an employee education plan. Schedule an informational meeting to go over all the offerings, costs, and benefits with employees well ahead of the open enrollment deadline.

Data from Sears, Darden Restaurants, and Aon Hewitt revealed that employees who are fully informed about their options are more likely to select the most economic choice. And when they’re given ample time to consider their options, employees are increasingly opting for consumer-driven plans.

The ACA employer mandate doesn’t have to drain your company’s finances. Planning and implementing education programs prior to the open enrollment period can set your company up for a smooth transition into an era of fiscally responsible employer-sponsored coverage.

Photo credit: jennyjo71 / Flickr

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