A Guide to Open Enrollment: How Does it Work?

If you’re an employer who’s new to open enrollment, here’s a primer for you.


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All you need to know about open enrollment, including spending account enrollments and deadline information

Open enrollment is the annual period for employees to make selections for healthcare coverage for themselves and their family members. Typically running from November 1 to December 15 every year, open enrollment gives employees 45 days to review available options and enroll in plans for medical, dental, vision, flexible spending accounts, life insurance, and more.

For employees, open enrollment is a time to look at how they have used their insurance coverages in the past and how they anticipate they will use them in the future. From there, they should be able to decide which of any available plans and policies is the right choice for the entire coming year.

For businesses, open enrollment is one of the busiest — and generally most frustrating — times of the year, particularly if they manage the process in-house.

For companies, it starts long before issuing necessary information and enrollment form paperwork to staff members in advance of the opening and closing dates. Businesses must answer questions, request and give advice, and have employees fully complete forms to assure everyone gets the coverage they want and need. Failure to meet open enrollment deadlines could result in substandard or no coverage for the entire coming year; it’s critically important open enrollment runs smoothly and efficiently.

The ABCs of open enrollment 

Open enrollment, for employees, begins around early to mid-November and ends December 15.

Read more: Open Enrollment 2021 Checklist 

But for employers, open enrollment begins and ends earlier and later. Before the deadline to issue open enrollment materials to workers, small and medium-sized businesses work with insurance carriers to accumulate all necessary materials — including policy information and any changes to current policies and enrollment forms — for all employees. Businesses compile employee packets that include all the information employees need to review each available policy: for medical, dental, vision, etc., and issue them to staff members before November 15.

For those staffers who drag their feet, OE admins must send out reminders to get the forms filled out and submitted before the December 15 deadline.

Once issued, businesses will need to keep a close eye on who has returned their forms and who has not. Open enrollment administrators must assure employees return forms in a timely manner, submit every form correctly, and sign them. For those staffers who drag their feet, open enrollment admins must send out reminders to get the forms filled out and submitted before the December 15 deadline.

After employees have turned in all the forms, businesses must make copies for employee healthcare files and submit the original, signed forms to the appropriate carriers. The deadline for submission for employees is December 15. Carriers set additional deadlines for employers to turn over the completed forms so they can enroll employees or make election changes in advance of the final due date of January 1 for the coming year. This is when employee elections take effect. Depending on the carrier you work with, you may have as little as 5 days to submit completed enrollment forms to meet the deadline for enrollment.

Read more: Why Your Business Should Have Online Open Enrollment 

Maintaining separate medical records

Examples of medical information that must be must be in a separate employee medical file accessible only to those involved in benefits administration include:

  • Open enrollment elections
  • Family and Medical Leave Act (FMLA) or medical leave information
  • Americans with Disabilities Act (ADA) requests and accommodations
  • Medical exams
  • Workers’ compensation
  • Medical flexible spending account information

The ADA and the Genetic Information Nondiscrimination Act (GINA) require companies to keep all personal health or occupational health information separately from other employee personnel data.

Employee personnel records (applications, performance reviews, etc.) should be kept in another file. This way, those who have access to personnel records but don’t have access to medical data cannot inadvertently view the employee’s private medical data.


Open enrollment is also the time employees make elections to set aside pre-tax dollars for flexible spending accounts (FSAs), which can be made for healthcare expenses, which are sometimes called:

  • Medical spending accounts (MSAs), and/or
  • Dependent care spending accounts (DCSAs)

Employees determine what amount of their own wages they plan to set aside each pay period for the coming year to cover any expenses not covered by their healthcare plan (deductibles, co-pays, etc.) or to cover the costs of childcare for the coming year. Workers make their amount selections during the open enrollment period and deductions begin with the first payroll after January 1.


Health Reimbursement Account or Arrangement (HRAs) are funded solely by employers. These accounts set aside money employees can use for specific medical, dental, and vision costs including purchasing coverage through Affordable Care Act (ACA) exchanges.

HRA accounts have 2 options for funding:

  1. HRA pays first: This means employees use the funds put into the account at the beginning of the year by the employer until they are there are no more funds. After employees exhaust the funds, any additional costs afterward will be the responsibility of the employee.
  2. Employee pays first: This requires the staff member pay all their healthcare costs up to an amount predetermined by the employer. After that, the HRA pays any additional costs through employer funding.

Health Reimbursement Account or Arrangement (HRAs) are funded solely by employers. These accounts set aside money employees can use for specific medical, dental, and vision costs.

Funds in an HRA plan can roll over year to year, but employees who leave the company do not own the account. Any funds remaining if the employee separates from the company revert back to the employer, although businesses have the option to let the employee continue using the funds until they run out.


Health savings accounts (HSAs) are accounts the employer creates for staff members who have high-deductible health plans (HDHPs). These allow the employer and/or the staff member to set aside funds to offset the costs of qualified medical expenses over and above an HDHP’s coverage limits and/or exclusions.

For 2021, the maximum contribution allowed into these accounts for single coverage is $3,600/$7,200 for family coverage. To qualify, the minimum annual deductible for the HDHP must be $1,400 for single/$2,800 for family coverage. The maximum out-of-pocket expense for the HDHP can be no more than $7,000 for single/$14,000 for family coverage.

Employers have 3 options for funding HSA elections. They may:

  • Make a prorated contribution with every employee payroll
  • Contribute on a monthly look-back schedule, contributing for each month the employee is enrolled
  • Fully fund the account at the beginning of the year

Remember that all contributions are tax-free and not a part of the employee’s income.

Even if the employee leaves your company, they take the HSA account with them — including employer contributions.
All funds in an HSA, including employer contributions, belong to the employee once in the account. Even if the employee leaves your company, they take the HSA account with them — including employer contributions. Similar to a 401(k), employees can use the funds or keep them for the future. After age 65, or if they become disabled, workers can withdraw funds for non-medical expenses without penalty. However they will still pay taxes on the income from the withdrawal.

Open enrollment deadlines apply to all benefit options

In addition to healthcare coverages and spending accounts, open enrollment covers a wealth of employee benefit options. Retirement plan deductions for the coming year are managed during the open enrollment timeframe. While employees may change the way their investments are managed throughout the year — depending on the plan — they may only determine how much of their pay to contribute to their fund for the coming year during annual open enrollment.

Some companies provide life insurance options and long- and short-term disability plans; others provide employees access to accounts that fund legal and financial advice. There are many options available to provide to staff for financial, medical, and wellness benefits. Employees must elect all that they want during the open enrollment timeline. Employers must meticulously collect, document, and forward all of their choices to the appropriate entity to ensure accuracy and coverage.

If a staff member misses open enrollment, the repercussions can be significant. If they were already enrolled in healthcare coverage, they will continue with the same plan throughout the coming year with no allowable changes. Those who were not previously enrolled may have to wait for a qualifying event (marriage, birth, etc.,) before they are allowed to sign up for coverage, or wait until the next open enrollment in November for the following year.

Open enrollment is complex and requires meticulous attention to detail. For SMBs that manage open enrollment in-house, the process can take months. The range of benefits available to staffers every year can be lengthy. However, the amount of time employees have to make their elections and their employers have to make them happen for the coming year is very short.


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