An employer’s guide to open enrollment: Best practices for no penalties
There’s been a lot of talk about the Affordable Care Act (ACA)—what might get repealed, what’s going to be enforced, and what its impact will be on the individual market—without a lot of clarity about what’s going on.
Open enrollment, a crucial period for the health care industry and insurance markets, is one of the biggest points of confusion. With individual markets suffering from shortened enrollment periods and higher prices this year, how will that affect employers and employees?
To shed some light on the situation, we’ve compiled information on how employers should proceed during this increasingly confusing period called open enrollment.
Confusion from Capitol Hill
Over the past 10 months, President Trump has signed a number of executive orders pertaining to the ACA and the individual markets it influences. These orders—beginning with one that tells government agencies to “lessen the burden” of the ACA—have largely left the landscape unchanged. His most important decision, announced in October, was to end the cost-sharing subsidies that help insurance companies fund the individual markets, thus driving up uncertainty and in return, costs.
Between these executive orders and the shortened time for open enrollment (Nov. 1 to Dec. 15 this year, as opposed to Nov. 1 to Jan. 31 last year), the country remains confused over who should be getting coverage, who will be getting subsidies, and who can get fined for what.
For employers, not much has changed. The ACA employer mandate and its reporting and compliance requirements remain in place, as do the penalties that come with them. One of these penalties is the fine you could get if an employee purchases subsidized insurance from the individual markets. To avoid this, applicable large employers (ALEs) need to take the proper steps to ensure you are offering affordable, minimum essential coverage (MEC) to employees working 30 hours per week. You must also document these offers in the case of an IRS audit.
How to avoid thousands of dollars in penalties during employer open enrollment
Despite the lack of change, employer open enrollment remains tricky.
Typically, you’ll have a representative from the insurance company or your broker speak to eligible employees about how their health care options may have changed in the past year, and ask if anyone would like to make any changes to their enrollment. This meeting should be well documented and announced to your employees in a way that is typical of your company, and that is likely to be read (or listened to), and understood by all the necessary employees.
Ensure open enrollment notifications are delivered throughout the company, and if you can, document that everyone received them with some kind of online survey or read receipt. A simple communication oversight or undelivered email could, in the eyes of the IRS, mean you didn’t offer a particular employee health insurance.
If employees want to waive the company’s health insurance, make sure you provide a waiver for them to sign indicating this choice. These waivers are particularly important, as they can be your safety net in case of an audit. If there’s no proof that an eligible employee waived a valid offer of health insurance, you can get penalized as if you hadn’t even made an offer.
And the threat of fines is real. The IRS has begun sending letters to ALEs as a way to identify and penalize those employers who did not provide MEC to eligible employees, as laid out under the ACA’s employer shared responsibility provisions. With ACA enforcement underway, thorough documentation of all offers of coverage and employee waivers is essential.
Don’t get dinged during open enrollment
Like most significant moments in health care compliance, open enrollment is often tricky for employers, and only made trickier by the inconsistent rhetoric coming from Capitol Hill. While not much has changed from an organizational standpoint, confusion has certainly ratcheted up due to the lack of communication and open enrollment advertising on the individual markets.
Overall, the advice stays the same: Continue reporting as usual, keep a good paper trail, and don’t let the confusion distract you from your ultimate compliance goals.