Your Guide to Benefits Enrollment: Annual vs. Open

Your Guide to Benefits Enrollment: Annual vs. Open

Your Guide to Benefits Enrollment: Annual vs. Open

Navigating the complexities of benefits and insurance can be overwhelming, especially when on a strict timeline. Decoding jargon alone can cause many to lose interest in the process altogether. However, take heart — the team at Suzuki & Associates is here to help guide you through the benefits process.

Among the glossary of terms we often see misunderstood, two stand out prominently: “annual enrollment” and “open enrollment.” Understanding how these two terms are similar, yet different can be critical to making benefit planning decisions on time. Missing these time-sensitive deadlines could significantly impact your well-being and financial picture.

Continue reading as we explore the nuances of Annual Enrollment vs. Open Enrollment.

ANNUAL ENROLLMENT VS. OPEN ENROLLMENT

Annual Enrollment is the yearly “check-in” on your benefits plans as provided by employers. During this specific window, employees can revisit current benefits, make any necessary modifications, or enroll in new offerings. Things to consider during annual enrollment include your portion of the cost (did it increase or decrease), will your current plans adequately cover any known issues on the horizon, and whether you would benefit from making any changes.

When we consider Open Enrollment, we think about a broader audience. This is the designated time when individuals, no matter their employment status, can join the healthcare marketplace. You can either enroll in a new health insurance plan, re-enroll in your current one, or make modifications. In the open enrollment marketplace, you’ll have a wider variety of plans to choose from than what your employer may offer. In 2023, approximately 18.2 million Americans have enrolled in coverage through the health insurance marketplace, increasing from a low of 14 million over the past five years. Open enrollment for 2024 healthcare plans will run from November 1, 2023 – January 15, 2024.

A PEEK INTO HISTORY — HOW WE GOT HERE

Understanding the historical background of the health insurance market can help us understand why we have such options today. Prior to World War II, most Americans paid for healthcare expenses out of pocket. The plans that were available at this time only covered expenses like hospitalizations, which the average person couldn’t afford.

As businesses evolved and competition for talent grew, employer-sponsored benefits became a more significant perk to offer. As the private insurance market grew, so did the cost. Small business owners especially faced difficulty choosing whether or not to offer employer-sponsored healthcare plans.

Open enrollment is a byproduct of healthcare reforms that became a political focus in the early 2000s. Too many Americans simply went without healthcare coverage because the cost had become too much. Then, a new option emerged through Congress’ passage of the Affordable Care Act (ACA) in 2010. The goal of the ACA was to offer more people access to healthcare, ensuring everyone had a fair chance to secure insurance without being tied to potentially more expensive employer-offered benefits.

The ACA’s Transformational Impact on Open Enrollment

The Affordable Care Act (ACA), often called “Obamacare,” marked a shift in the U.S. healthcare environment. One of its primary objectives was to enhance the quality and affordability of health insurance and, in turn, reduce the number of uninsured Americans.

A key component of the ACA was the introduction of healthcare marketplaces or “exchanges.” These marketplaces were platforms that allowed individuals to shop for, compare, and purchase insurance plans. But for these marketplaces to function effectively and prevent only those expecting high medical costs from signing up, a structured enrollment period was needed. This was how the concept of “open enrollment,” as we know it today, was born.

Now, prior to the ACA, individuals could purchase insurance at any time, but there were often more restrictions, less transparency, and higher chances of being denied coverage based on pre-existing conditions. The ACA’s open enrollment brought about these key changes in the process:

  • Defined Timeframes: Open enrollment periods were established, usually spanning a few months towards the end of the year. During this time, individuals could sign up for or change their health insurance plans.
  • Health Coverage for Pre-existing Conditions: Before the ACA, those with pre-existing health conditions struggled to get coverage. After the ACA, insurers could no longer deny coverage based on these criteria, making the open enrollment period even more essential for many Americans. This rule change, which took effect in 2014, helped nearly 25 million Americans with pre-existing conditions.
  • Awareness & Accessibility: The ACA led to widespread communication campaigns to educate the public about their health insurance options. These efforts helped to launch an era in which choosing an insurance plan became a more informed and transparent process.
  • Financial Assistance: The ACA introduced subsidies for eligible individuals, making insurance more affordable for millions. In 2020, 87% of people who bought insurance through the marketplace received a subsidy. This factor added a layer of consideration during the open enrollment period as individuals weren’t just assessing coverage options, but also potential financial aid.
  • Penalties & Mandates: The ACA initially imposed a mandate that penalized those without insurance coverage to ensure a balanced and functional insurance market. This made the open enrollment period even more crucial as individuals scrambled to secure coverage and avoid penalties. The mandate was eventually repealed in 2019; however, several states, including California, have since created their own healthcare mandates.

The ACA’s introduction of the open enrollment period and its other transformational changes have truly reshaped how Americans approach, evaluate, and secure health insurance.

THE PROS AND CONS OF ANNUAL ENROLLMENT

Every coin has two sides, and so does each enrollment type. While there are pros and cons to each type of health insurance coverage, populations are very split as to which they choose. In California, for example, approximately 47% of the population enrolls in an employer-sponsored health plan through annual enrollment; this is more than 18 million people. However, in states like New Mexico, Arkansas, Mississippi, and Florida, it’s closer to one-third of the population choosing employer-sponsored plans.

With annual enrollment, you gain the advantage of having more customized options. For instance, a tech company might want to offer benefits like ergonomic office equipment or access to mental health apps in its plans in order to cater to its specific workforce’s needs. These types of tailored additions are typically not found in a broader marketplace plan.

Also, annual enrollment plans have the allure of employer contributions that can drastically lower the cost of health insurance. Imagine if your employer offered to cover 70% of your plan cost — that’s a subsidy many would not turn down.

However, the downside of employer-sponsored is that you’re typically limited in choices. If your employer doesn’t offer a PPO plan, for example, you may be stuck choosing a plan with a strict in-network requirement that could make finding care when you need it more challenging.

Yes, open enrollment in the healthcare marketplace does provide an individual with many more options; however, the cost could be higher without the employer kicking in for a portion of the premium.

GUIDANCE FOR THE ROAD AHEAD

It’s critical for individuals to actively participate in these healthcare enrollment periods. Don’t be complacent and simply let your employer plan rollover from the year before. Always take time to compare plans during annual enrollment.

In 2024, here are some of the changes we can expect to see in healthcare offerings:

  • Increased premium costs — mostly due to rising inflation but also reflective of the addition of more expensive gene therapies that help treat cancers and musculoskeletal issues.
  • Expanding behavioral healthcare access — this can include expanding access to virtual behavioral healthcare options and expanding EAP services.
  • Offering “point solutions” — these services include a virtual care component for ongoing treatment of chronic conditions like diabetes.
  • Navigation and advocacy services — helping employees consider options for complex surgeries, cancer treatments, and more.

If you’re eyeing the marketplace during open enrollment, remember to look beyond just the premiums. Consider co-pays, network restrictions, and covered services.

If you’re considering an employer-sponsored plan, pay close attention to communications, ask questions, and attend any informational sessions. Helping the HR team understand your needs can lead to better communications and more relevant benefits in the future.

While the lines between these enrollments might blur from time to time, the American healthcare insurance industry has gone through a transformational shift that was meant to assist more people with access to affordable care. This shift could continue well into the future, so it is essential to reflect on your plan options and research what’s available to choose the option that best meets your needs.

IN CONCLUSION

Whether you’re gearing up for annual or open enrollment, the key is staying informed. The choices made during these windows have lasting impacts, affecting your access to healthcare and your finances.

At Suzuki & Associates, we champion your power to make informed decisions. Remember, whether you participate in open enrollment or annual enrollment, it’s not just about ticking boxes on a form; it’s about charting a course for a secure and healthy future.