The Difference Between Active and Passive Enrollment

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 an 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 and Cons Of Active Enrollment

• Pros
  • Review and re-select benefits.
  • Enable to educate employees on benefits.
  • Decrease employee turnover.
  • Benefits that can’t be overlooked.
  • Updated information.
  • Promote decision support tools.
  • Encourages on-going employee benefits education.
  • Provides room to adjust coverage.
• Cons
  • Time consuming.
  • Costly.
  • Lack of convenience.
  • Employees who fail to participate in yearly enrollment will not get benefits.

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 and Cons of Passive Enrollment

• Strengths
  • Convenience.
  • Saves time.
  • Save on enrollment related costs.
  • Employees don’t have to participate if they’re not changing their plan.
• Shortcomings
  • Reviewing benefits may not be a priority.
  • Higher benefits costs.
  • Passive treatment of some benefits.
  • Doesn’t encourage ongoing benefits education.

How to Set-Up an Employee Benefits Plan

Before deciding which enrollment approach to take, make sure you first have an employee benefits plan set up first. 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:

1. Formulate a budget.
2. Create a needs list of benefits that employees need you to provide (this can be done by collecting employee feedback).
3. With budget and employee feedback in mind, create a benefits plan.
4. Communicate the benefits plan to your employees (this is especially important for an active enrollment approach).
5. 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

1. Ask employees about any benefits they’d like to see next open enrollment.
2. Educate employees on new and existing benefits offerings.
3. Assume your employees are uninformed on benefits, and explain benefits terminology in a concise manner.
4. Communicate frequently about open enrollment deadlines.
5. Provide employees with instructions on how to enroll.

Active vs. Passive Enrollment: Which method is best 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.