How to Improve Efficiency During Open Enrollment

The HIPAA notice of privacy practices, for example, requires that employers send a reminder to enrollees at least once every three years saying the notice is available on request. Although this notice is not required to be sent to employees annually, adding it to the open enrollment materials makes things easier. “If you do so, you’ve sort of eliminated this three-year [HIPAA] reminder requirement,” said Mike Sinkeldam, principal and compliance consultant with Mercer’s health and benefits business.

Open enrollment can also satisfy requirements for summary plan descriptions (SPDs), summary of material modifications (SMMs), summary of material reductions (SMRs), HIPAA special enrollment rights notice, CMS creditable coverage notice (must be out by October 15) , the initial COBRA notice, the USERRA (military leave) notice and certain state reporting mandates.

Employers must distribute new materials this year, many a result of health care reform. Mercer thinks it is best practice to send these materials at one time during open enrollment, rather than “piecemealing” them through the year, he added.

These materials include:

•  Health care FSA limit at $2,500 for the 2013 plan year; 
•  Newly updated state children’s health insurance program (CHIP) notice effective July 31, 2012; 
•  Women’s preventative health requirements for non-grandfathered plans;
•  New Medicare tax on high-wage earners; 
•  Explanation on the value of coverage on employees w-2 and that amount is not taxable; and
•  Explanation on medical loss ratio (MLR) and how it will be used.

Another new communication requirement is the summary of benefits and coverage (SBC), which is a uniform, easy-to-understand format that can facilitate comparison shopping. This does not replace an SPD, Sinkeldam said.  

Most employers will want their vendors to draft the SBCs, Sinkeldam said, adding that employers should discuss who will be responsible for distributing these materials after they are created.

Under the Employee Retirement Income Security Act (ERISA), which covers many notices, employers must deliver them in a way that is “reasonably calculated to ensure actual receipt of the material” using a method “likely to result in full distribution.” This means employers cannot just post notices on an office bulletin board or leave them in a pile in the break room, said Wade Symons, employee benefits attorney at Mercer.

“They really want individual receipt as the key,” he said.