In preparation of open enrollment, one of the biggest choices HR teams must make is whether open enrollment will be “active” or “passive”. There are a few factors that come into play when deciding which enrollment approach to take.
Is your benefits package the same as the previous year? Any plan changes? Are you introducing any new benefits? Do you have a system in place to verify dependent eligibility during enrollment?
With this in mind, take a look at our breakdown of active vs passive approaches to enrollment:
Active vs. passive open enrollment
What is active enrollment?
In an active enrollment, employees must actively go through the enrollment process each year and elect or waive coverage for all benefits being offered. Employers should always go with an active enrollment if they’re offering new benefit options or if there will be any changes to existing plans. In an active enrollment approach, you have the opportunity to communicate key information while also prompting employees to review demographic data and other information (like beneficiaries and dependents) to make sure it is up to date.
Pros of active enrollment
Review and re-select benefits
Active enrollment requires employees to review and re-select their benefits each year rather than automatically rolling them over. This approach encourages employees to take a closer look at their current coverage and make adjustments based on life changes, new plan options, or changing health and financial needs.
Enable employee education on benefits
Since active enrollment requires participation, it naturally provides an opportunity to educate employees about their benefits. HR teams can use this time to highlight new offerings, explain plan updates, and ensure employees fully understand their coverage options. Improved awareness often leads to better utilization of benefits throughout the year.
Decrease employee turnover
When employees feel confident in their benefits choices and understand the value of what’s offered, overall job satisfaction tends to increase. Active enrollment helps reinforce the employer’s investment in employee well-being, which can contribute to higher retention and engagement.
Ensure benefits that can’t be overlooked
One of the biggest advantages of active enrollment is that it prevents employees from simply sticking with last year’s choices out of habit. By requiring employees to actively review their options, HR teams can ensure that individuals take note of any new benefits or plan changes that could better support their current needs. Life circumstances, financial goals, or healthcare needs often change year to year. Active enrollment gives employees the chance to re-evaluate and select coverage that’s truly the right fit for their situation.
Updated employee information
Because employees must log in and confirm their choices, active enrollment provides an opportunity to collect up-to-date information such as dependent details, addresses, and contact information. This helps HR maintain accurate records for payroll, benefits carriers, and compliance reporting.
Promote decision support tools
Active enrollment is a great time to introduce or promote decision support tools within your benefits administration platform. These tools help employees compare plans, estimate costs, and make informed choices that align with their needs and budgets.
Encourages ongoing benefits education
By revisiting their benefits every year, employees remain engaged and informed about their available resources. This consistent exposure helps build a stronger culture of benefits awareness and appreciation across the organization.
Provides room to adjust coverage
Active enrollment allows employees to update their coverage based on changes such as marriage, childbirth, or new financial priorities. It ensures that benefit selections stay relevant and effective from year to year.
Cons of active enrollment
Requires more time and planning
Because employees must review and actively select their benefits each year, active enrollment can take more time than a passive process. HR teams may also need to dedicate extra effort to communication and education—but this investment typically pays off in more informed and satisfied employees.
May involve additional administrative work
Active enrollment campaigns often require more preparation from HR and benefits administrators, such as updating materials, scheduling reminders, and fielding employee questions. However, with a benefits administration platform that streamlines communication and enrollment tasks, much of this effort can be simplified.
Less convenient for employees with unchanged needs
Some employees may view active enrollment as unnecessary if they don’t expect changes in their benefits. But even for those individuals, the process provides an important opportunity to confirm that their current coverage still meets their needs and to explore any new options that could offer better value.
Risk of missed participation without proper communication
If employees fail to make their elections during the enrollment window, they could miss out on coverage for the plan year. Clear reminders and a strong communication plan help ensure employees understand the importance of taking action and completing their selections on time.
What is passive enrollment?
Passive enrollment, often referred to as auto-enrollment, is a streamlined benefits enrollment method that employers adopt to ensure consistent benefits coverage for their employees. Under this system, employees are automatically re-enrolled into their existing plans or the nearest equivalent, eliminating the risk of coverage lapses due to non-participation during the enrollment period. While this model offers simplicity, it’s crucial to note its potential downside: employees might neglect to enhance their benefits knowledge, contemplate alterations in plans, or update their personal details. Such oversights can lead to complications in the future.
Pros of passive enrollment
Convenience for employees and HR
Passive enrollment is often seen as the easier route since employees don’t need to take action if they want to keep their existing coverage. For HR teams, it can reduce the volume of enrollment-related questions and streamline administrative tasks during a busy season.
Saves time in the short term
Because the process requires little to no employee participation, passive enrollment tends to move faster. This can be appealing for organizations with limited administrative resources or employees who are already familiar with their benefits package.
May reduce immediate enrollment costs
With fewer communications and meetings needed, employers may save on short-term enrollment-related expenses such as materials, staff time, and technology support. However, these savings can come at the expense of long-term engagement and benefits optimization.
Cons of passive enrollment
Employees may not review their benefits
The main drawback of passive enrollment is that it allows employees to automatically keep their existing elections—often without reviewing their options. This can lead to employees overlooking new plans, cost-saving opportunities, or enhanced benefits introduced since the last Open Enrollment.
Potential for higher overall benefits costs
When employees don’t re-evaluate their coverage, they may remain in plans that no longer suit their needs or budgets. Over time, this can result in higher out-of-pocket expenses for employees and increased employer costs due to underutilized or misaligned coverage.
Promotes a passive approach to benefits
Passive enrollment can reinforce the idea that benefits require little attention. This mindset can lead to disengagement and a lack of understanding about the full value of the benefits offered.
Doesn’t encourage ongoing benefits education
Without an active re-enrollment process, employees miss valuable opportunities to learn about new options, decision support tools, or programs designed to improve their well-being and financial outcomes. Over time, this can contribute to lower satisfaction and reduced appreciation of the employer’s investment in benefits.
How to set-up an employee benefits plan
Before deciding which enrollment approach to take, make sure you have an employee benefits plan set up, including considerations for employee benefits liability insurance. This will help you make a decision on whether you should take an active enrollment or passive enrollment approach. To set up a benefit plan:
- Formulate a budget.
- Create a needs list of benefits that employees need you to provide (this can be done by collecting employee feedback).
- With budget and employee feedback in mind, create a benefits plan.
- Communicate the benefits plan to your employees (this is especially important for an active enrollment approach).
- Roll out the plan for open enrollment.
Why communication is key when implementing active enrollment
An active enrollment approach is only successful if employees are fully engaged in open enrollment, and it’s up to employers to encourage their teams to participate in open enrollment. That’s where communication comes into the picture, as it is crucial to yielding high participation in open enrollment. Employers must communicate about open enrollment because benefits are not top-of-mind for employees, and likely won’t be aware of what’s happening if there’s a lack of frequent communication. Employers should communicate about plan changes, important deadlines, instructions for enrollment, etc.
Tips for managing an active benefits enrollment
- Ask employees about any benefits they’d like to see in the next open enrollment.
- Educate employees on new and existing benefits offerings.
- Assume your employees are uninformed on benefits, and explain benefits terminology in a concise manner.
- Communicate frequently about open enrollment deadlines.
- Provide employees with instructions on how to enroll. For more open enrollment tips and open enrollment ideas, ensure clear and consistent communication throughout the enrollment period.
Which enrollment strategy is right for your organization?
Overall, we recommend you take an active approach to open enrollment. Even if your benefits haven’t changed much from last year, it’s better to have employees go through the process to verify that personal information is up to date and determine whether their current plans are aligned with wherever they’re at in life.
It’s also the perfect opportunity for employers to communicate the value of their benefits package and help employees make informed healthcare decisions for themselves and their families.
