Open enrollment — two words that put fear in the heart seasoned HR professionals and business owners alike. One of the most labor-intensive administrative duties of the year, open enrollment is critical to ensuring coverage for employees.
Managing open enrollment for 2020 smoothly and effectively requires planning and organization. It begins with planning well in advance of enrollment dates. Read this guide to navigate open enrollment dates.
When is open enrollment for 2020?
For most businesses, open enrollment begins Nov. 1, 2019, and ends Dec. 15, 2019.
That can vary depending on your plan year, but it’s typical for private carriers as well as coverage under the Affordable Care Act (ACA). You’ll only have a 45-day window to assure everyone has made their elections for the coming year. Options chosen this enrollment period will affect coverage from Jan. 1 to Dec. 31, 2020, unless a qualifying event (marriage, divorce, birth, death, loss of other coverage) allows for a change in elections.
Affordable Care Act and business
Under the ACA, businesses with 50 or more employees are still required to provide health coverage for staff or pay fines of $2,000 per employee for every employee in excess of 30 staffers. Businesses with fewer than 50 employees will not incur fines if employees buy individual coverage through healthcare exchanges.
What’s new for 2020 in health care coverage?
While the federal individual mandate requiring the purchase of healthcare coverage was eliminated for 2019, some states have enacted healthcare mandates.
Massachusetts’ individual mandate varies based on income, age and other factors, but residents who do not purchase coverage will pay a fine through their state tax return. Massachusetts employers who shift employee healthcare costs to the state may also incur costs and penalties.
In New Jersey, residents who do not purchase coverage can be fined over $2,000 per year.
Vermont has passed an individual mandate law, but penalties for not having coverage were recently removed from the legislation.
Washington, D.C. will fine residents $695 per uninsured adult, or 2.5% of household income, whichever is greater.
California, Connecticut, Hawaii, Maryland, Minnesota, Rhode Island, and Washington State are all considering some form of state mandate. Be sure to check with your local authority to verify whether mandates or employer penalties apply.
2020 shared-responsibility percentage change
In July, the IRS announced employees’ maximum contribution percentage has been changed for 2020. If you provide coverage for employees under the ACA, the affordability requirement for 2020 has been reduced.
Employee household income thresholds will change from 9.86% in 2019, to 9.78% in 2020 for the lowest cost, self-only coverage option.
Health reimbursement arrangements announced
In January 2020, employers may begin using health reimbursement arrangements (HRAs) to reimburse employees for the cost of individual healthcare coverage.
Somewhat similar to flexible spending accounts (FSAs), employers could create and fund accounts employees use to purchase individual healthcare if they decide to opt out of company-sponsored plans.
Employees will see tax savings if they utilize the plans: funds deposited into the accounts reduce the staffer’s annual gross income. Unlike FSAs, only the employer may contribute funds to the account.
On Jan. 1, 2020, employers can offer workers tax-preferred funds to pay for the cost of coverage they purchase in the marketplace. Employees will be able to use the funds for premium payments as well as out-of-pocket expenses, like deductibles and copays. The new rule, effective Aug. 19, 2019, is applicable to plans starting in January 2020.
Changes in healthcare rules for 2020 could realize significant savings for small business, the self-employed and staff members. Plan to work with your employees and local carrier well in advance of enrollment deadlines to make sure you’ve chosen the best options for coverage in 2020.