Open Enrollment: Engaging, Educational, Compliant?

Now is the time of year when HR professionals begin to think about open enrollment for their health and welfare plans. Communicating the value of the benefits the organization provides, how to get the most out of what is being offered and, yes, at a basic level, how to enroll, are all familiar goals for open enrollment. Yet another important, although sometimes overlooked, aspect of open enrollment is compliance.

An Annual Opportunity

Consider first that most things in life are about your perspective. Choose to look at open enrollment as an opportunity rather than a chore. There is the opportunity to create value for your employees and their dependents by communicating with them about their benefits, the opportunity to manage risk for your organization through thoughtfully written and accurately timed notices and disclosures and the opportunity to streamline your processes by evaluating the way you are meeting your compliance obligations.

Plan Design Changes and 2020 Limits

According to Buck’s latest National Healthcare Trend Survey, medical trends between 7.2 percent and 7.7 percent will continue to outpace inflation; many employers may adjust benefits accordingly. At this point, most employees are accustomed to expecting some type of change in their benefits; however, it cannot be stressed too much that these changes must not only be communicated clearly and accurately to participants, but also create the following compliance “to-dos.”

Grandfathered status: If you still have a grandfathered plan in 2019, you must determine if you will maintain this status for 2020. If you will continue to maintain grandfathered status, you must provide a grandfathered plan notice in your summary plan description (SPD) and open enrollment materials. Model language can be found on the DOL website.

If there is a loss of status, you must ensure your plan complies with the additional patient rights and benefits required by the Affordable Care Act (ACA), including the requirement for first-dollar coverage on certain preventive services. Visit the U.S. Preventive Services Task Force and www.HealthCare.gov for more information.

Updated limits for 2020: If your company sponsors a flexible spending account (FSA) or health savings account (HSA) with an accompanying high-deductible health plan (HDHP), you must ensure your plans comply with the new limits for the upcoming plan year.

*2019 limit. Figure is linked to CPI-U and has not be published for 2020.

SMMs, SPDs and SBCs: All represent acronyms for required plan materials and documentation. Make sure all changes made to your plan are reflected in these documents.

SBCs: Summaries of benefit coverage (SBC) are required by ACA and must be distributed at every open enrollment as well as when a special enrollment arises or for newly eligible employees and dependents. The SBC template and related materials are available from the DOL.

SPDs and SMMs: Summary plan descriptions (SPDs) must be distributed to new participants within 90 days after plan coverage begins. Any changes made to the plan should be reflected in an updated SPD or in a summary of material modifications (SMMs).

Participant Notices and Disclosures

This is where the proverbial rubber meets the road when it comes to compliance. While the above requirements might be thought of, or triggered by, a change to the plan, the following are just as important when it comes to plan governance.

Initial COBRA notice: COBRA applies to employers with 20 or more employees, and the initial COBRA notice generally must be provided to each covered employee and covered spouse within 90 days after plan coverage begins.

Notice of HIPAA special enrollment rights: This notice must be given at or prior to the time an employee is initially offered the opportunity to enroll in a group health plan to inform participants of their rights regarding special enrollments under HIPAA.

Annual CHIPRA notice: Group health plans must provide this notice to employees residing in states that offer premium assistance plans to help low-income children and families pay for health care coverage. A model notice can be found on the DOL website.

WHCRA notice: Women’s Health and Cancer Rights Act. This notice outlines a participant’s rights to mastectomy-related coverage. It must be provided upon initial enrollment and on an annual basis thereafter.

NMHPA notice: Newborns and Mothers Health Protection Act. This describes the requirements relating to hospital length of stay in connection with childbirth for a mother or newborn child. It must be included within the SPD, which should be provided within 90 days after plan coverage begins.

Medicare Part D notices: Notice to individuals who are eligible to enroll in Medicare about the value of prescription drug benefits under the employer-sponsored plan. The notice must disclose to the participant if the value of their prescription drug coverage under the plan is “creditable” or “non-creditable” as compared to Medicare Part D. It must be given prior to October 15 of each year, when Medicare open enrollment begins.

HIPAA privacy notice: A notice of privacy practices must be provided by covered entities (in this case, the health plan) to participants upon enrollment, and a reminder of the availability of the notice is required every three years thereafter. Note that self-insured plans are considered a covered entity by HIPAA. For fully insured plans, the health insurance company would likely be considered the covered entity and thus would be required to send the notice.

Wellness program notices: Both of the following should be given before the participant is asked to provide any health-related information or to take a medical exam.

• HIPAA wellness program notice: This notice must disclose the availability of what HIPAA deems a “reasonable alternative standard” whereby a participant can meet the requirements of a health-contingent wellness program and still qualify for the reward or incentive offered by the employer.
• ADA wellness program notice: For employers subject to the Americans with Disabilities Act, wellness programs that include any health-related questions or medical exams must provide this notice describing the information to be collected, the manner it will be used, with whom it will be shared, limits on disclosure and how it will be kept confidential.

Streamline Where Possible

Yet another opportunity! This one comes by way of reviewing your administrative processes and procedures, as well as partnering with your vendors.

Where it is possible, consider incorporating some of your notice requirements in your SPD. For example, the initial COBRA notice, notice of HIPAA special enrollment rights, WHCRA and NMHPA notices can all be included in your summary plan description.

Yes, it is a lot of information, but you have a captive audience at open enrollment. Use this time as an opportunity to meet many of your notice obligations. Doing so now increases the likelihood that participants will pay attention to what they are receiving and ensures you have met compliance requirements. Check with your vendors. Don’t assume they are providing a notice; ask the appropriate questions. Additionally, make sure they are updating their systems to match increases in FSA and HSA limits, as well as cross-applying plan deductibles and coinsurance where applicable relative to EHBs (essential health benefits) per ACA.

As you move into this busy season, take stock of what you can do now to meet your goals. Incorporate a compliance check-in to ensure you are taking advantage of this important opportunity to create an engaging and educational – and yes, a compliant – open enrollment.