One of the most important decisions a benefits manager will make each year is whether to hold an active vs. passive enrollment.
Traditionally, the trend has been toward passive due to the administrative burden involved in active enrollments. A 2011 study found that 71% of U.S. employers opted for passive enrollment. Many of you might be thinking, if it’s not broke, don’t fix it, right? However, there are downsides. Passive enrollment may lead to employees opting for the wrong benefits year over year, which can cause strain on budgets and stress for employees who aren’t properly covered. Plus, since there are no real action items in passive enrollment, employees are more likely to be disengaged and may not know or appreciate the benefits employers are offering.
Active enrollment isn’t without its drawbacks either. If during annual enrollment employees aren’t informed about their benefits and they fail to make their selections before the end date, they will be left without coverage for a full year, until the next annual enrollment period. This can cause major headaches for HR and benefits managers. Not to mention, an employee without coverage is not a happy one. Major direct communication with employees is key to active enrollment success. And, without a technology partner that can help streamline communications to relieve some administrative burden, active enrollment could become a huge lift for smaller HR departments.
As benefits technology gets better and the user experience improves, employers may be more likely to explore an active enrollment strategy for higher engagement.
Both have pros and cons. Since it’s about that time for benefits managers to make this decision, here’s a pro/con list to help you make your decision.
Active enrollment pros
Active enrollment cons
Passive enrollment pros
Passive enrollment cons
Still on the fence about which one to choose? Take our handy quiz to find out which option would be better for your organization.