One of the main decisions you’ll make together with your Advisor is your Open Enrollment strategy. Your Open Enrollment (OE) can be a passive enrollment, active enrollment, or mix of both. In this article, we tell you everything you need to know about active and passive enrollments, including:
- The difference between an active and passive enrollment
- Why passive and active enrollments are set up on a per-product basis in Maxwell
- Things to keep in mind with passive enrollments
The difference between an active and passive enrollment
First, let’s define what the terms “passive enrollment” and “active enrollment” mean.
- Passive enrollment: Employees’ previous coverages (or waivers) roll over into the next year unless they make a change during OE. When the employee logs into Maxwell if they previously enrolled in or waived the product, it will be added to their cart as enrolled or waived again. Coverage levels, volumes, beneficiaries, and PCP information will also roll over where applicable. The employee can make a change to their elections, or to the product itself (example: to remove a covered dependent who is no longer eligible).
- Active enrollment: Employees must take action to enroll in or waive products. This is regardless of their coverage from the previous year. The products will not be auto-enrolled based on their coverage history. If an employee does not take any action during OE, their existing coverage will end at the end of the current plan year. It will not automatically carry over into the next plan year.
Why passive and active enrollments are set up on a per-product basis
In Maxwell, you’ll decide whether enrollment is active or passive on a per-product basis when setting up your OE. From our experience, most employers choose to take a hybrid approach. Employees are automatically re-enrolled in particular products but required to make elections for other products. A few reasons behind this:
- Contribution elections to HSAs and FSAs don't roll over into the next year. For these products, you’ll want to set up an active enrollment, so the employee chooses how much they want to fund these accounts this year, as the IRS maximum (or their personal budget) may have changed since the previous year.
- Please note: Maxwell does not support a passive enrollment setup for financial benefits. This includes HSA, FSA, LFSA, DCA, Commuter and HRA.
- Maybe you added a new vision product to your benefits package this year, but the rest of your offering is the same. You may want to set up all products as a passive enrollment, other than the vision products. Those should be set up as an active enrollment, so your employees must interact with the new vision product.
- Similarly, if you’re removing a product you used to offer in the past. For example, say you offered both an HMO and PPO last year, but this year you’re only offering the HMO. You can set up just your medical products as a passive enrollment in which anyone who was previously enrolled in the PPO will be automatically enrolled in the HMO.
Things to keep in mind with passive enrollments
If you do decide to set up products with a passive enrollment, you’ll want to keep in mind a few things as you’re choosing your products to set up as passive enrollments, as well as monitoring and closing out OE.
- While setting up OE:
- The strategy/method used to determine the benefit for an ancillary product has changed.
- Example: LTD 2012 product is based on increments; the LTD 2023 product is based on flat salary.
- The strategy for an ancillary product has remained the same, but the Increments have changed.
- Example: The Vol Life 2022 product had increments of $10k, $25k, $40k; the Vol Life 2023 product has increments of $10k, $20k, $30k
- Last year, there were no product linking rules, but this year there are product linking rules
- Example: In 2022, if an employee elected medical, the dental product was also added to their cart. In 2023, if an employee elects medical, a dental product is not added.
- Last year, the product had composite rates, and this year it has complex rates based on smoker status or wellness, but this year they do. Note: It’s okay if the product HAD complex rates based on smoker status or wellness last year, and now they don’t.
- In addition to some of the items mentioned above, you’ll want to make sure the plan design or cost strategy of the product hasn’t fundamentally changed from one year to the next. This is important because all the information won’t map over to the product correctly. The product should be set up as an active enrollment. Please talk to your Advisor if you’re not sure whether plan design or cost strategy of a product have changed enough to affect a passive enrollment. Examples of these changes:
- There can be a situation where the employee has both previously enrolled in and waived multiple previous products, and there’s only one new product. In this case, the new product will be added to the employee's cart, and all product options from the enrolled previous products will get set on the new product. The waived previous product will be ignored. After you complete OE setup, you can view the products on each employee's profile.
- While monitoring OE: For voluntary products that require EOI, approved amounts will passively map over to the new product. However, the amounts over the new product’s guaranteed issue (GI) will display to the employee as “pending.” You may want to let the employee know that these are approved, they will just display this way in the shopping experience.
- While closing out OE: When you end open enrollment in Maxwell, passively carried over products from the previous year will be automatically processed.
Still confused about active and passive enrollments? Talk to your Advisor about these strategies! They’ll know what will work best for your company and what to watch out for along the way.