What's the Difference Between Active and Passive Enrollment?
Open enrollment is approaching, which means it's time for HR to begin thinking about strategy—and that strategy needs to include more than just the benefits you're offering. Administrators must consider how to get their employees enrolled in the available benefits. Among these approaches are passive enrollment and active enrollment. What's the difference? Is there a better option? Considering each is key to successfully preparing for open enrollment.
What is Passive Enrollment?
Passive enrollment is a benefits enrollment strategy that employers use to simplify benefits enrollment and maintain benefits participation. Employers using a passive benefits enrollment strategy simply roll over each employee's benefit elections from the previous enrollment period.
According to a 2019 study, half of all surveyed employers in the United States used a passive enrollment strategy.
A passive approach certainly has its positives. For one, there's a much smaller chance that teams have gaps in their enrollment process, which can be a nightmare for compliance reporting. It also requires less time and energy from HR.
With that said, employees may select benefits that don't actually help them and could even miss out on much-needed coverage if they don't actively review their available options.
What is Active Enrollment?
On the other hand, active enrollment is a benefits enrollment strategy where each employee actively enrolls in benefits every enrollment period.
The difference? Instead of simply signing off on the same benefits as the year before, employees must actively participate in the full enrollment process each year.
This strategy presents its own set of pros and cons. For example, according to the Society for Human Resource Management (SHRM), active enrollment is the best way to engage employees each enrollment period because it requires employees to review all available benefits each year. Active enrollment also communicates what the company values in taking care of its employees—a key component of culture.
However, this process can be expensive and time-consuming. For HR departments with smaller teams, employees may find themselves dedicating all of Q4 to just open enrollment.
Should HR Use a Passive or Active Benefits Enrollment Strategy?
A lot can happen from one election period to another, meaning previous benefit elections may not suit your employees' best interests in the present. In fact, some employees may not even remember their previous elections!
For example, health insurance deductibles may rise from one year to the next, or a popular benefit might be dropped to accommodate a slimmer budget. When an employee automatically enrolls in a benefits package, they may miss out on these details, which could result in higher healthcare expenses for the year (among other negative impacts).
By relying on active open enrollment, employees are prompted to examine past benefits elections, current needs, and possible alternatives. This makes it a superior strategy to passive enrollment. Plan ahead this year with a 12-step timeline and roll out your best enrollment season yet.
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