Maximizing Open Enrollment for Employees

Open enrollment can be an overwhelming time for both employers and employees. Employees are given the opportunity to re-evaluate their current benefits and make changes for the coming year, while employers must choose a benefits package that balances cost and value and facilitate the enrollment process. Due to a variety of factors, benefit offerings are changing, placing new demands on employees and employers during open enrollment. To make the enrollment process as smooth as possible, it is important that employers educate and communicate with their employees effectively.

The Open Enrollment Process
As employer-sponsored benefits transition to more voluntary, employee-paid or employee-subsidized offerings, employees must assume more control in making smart decisions. Accordingly, employers should provide benefit information in an easy-to-understand format that provides employees with essential information, along with additional resources to help them make decisions.

Here is a typical open enrollment process:

  • Notification – Employers send out an organization-wide announcement alerting employees that open enrollment will begin shortly.
  • Receipt of Information – Employers distribute information about benefit plans, selection information and the appropriate forms to their workers. Employees may also receive personal information based on their elections from the previous year.
    • Employers may direct their employees to the company website, invite them to attend HR seminars, offer a benefit fair with the insurance company or offer access to interactive decision-making tools.
  • Making Decisions – Employees research their various benefits options and discuss with family to determine which benefits they will elect for the coming year.
  • Enrollment – Employees select their benefits.

To make the open enrollment process as smooth as possible, it is important that employers educate and communicate to their employees effectively. Maximize open enrollment with these strategies.

Open Enrollment Strategies
The following suggestions, based partially on an employee survey conducted by MetLife®, can improve the open enrollment process for both employers and their employees:

  • Establish solid communication between the HR department and employees. To do so effectively, conduct meetings and seminars and offer calculators, intranet education information and benefit fairs. If your organization is smaller, conduct one-on-one meetings with employees to determine exactly the type of information they need.
  • Survey your employee population to determine their priorities—product importance, preferred method of communication, etc. By doing so, employers can identify exactly what their employees want, and workers feel their needs have been heard by decision-makers.
  • Customize benefits and information resources to the life stages of your employees. For instance, if you have a large older population, feature more retiree benefits and long-term care insurance. It is also wise to communicate with your employees in the same way that they communicate on a regular basis. For example, if messages are received via postings in a common area, consider placing benefit information in that area as well.
    • By customizing your benefits to your population, you can increase employee satisfaction without increasing your spending.
    • Employees have an easier time selecting the benefits that are best suited for them and their families.
  • Provide easy-to-understand tools. This will lessen employee confusion and the feeling of being overwhelmed while trying to make tough decisions.
  • Consider offering new benefits, even if they are voluntary, such as dental insurance, vision insurance or benefits for prescription drugs. Employees tend to make more changes when they receive new options.
    • Even if employees must pay 100 percent for such voluntary options, they can still be attractive offerings. Since the benefits are negotiated by the employer, employees typically receive a group rate, which is significantly lower than purchasing them individually.
  • Offer a second, off-cycle enrollment period when new benefits are featured. This can be a time for employees to focus on voluntary benefits and other offerings that are not traditional. These benefits are typically overshadowed by health insurance and retirement options, so a second off-cycle enrollment is a great time for employees to focus on their other needs.
  • Make plan information as simple as possible, while also being interactive. Employees should be able to understand their offerings to make more knowledgeable decisions.
  • Maintain all Summary Plan Descriptions on your website, rather than directing employees to the insurance carrier site for information. This provides easy access to information and makes the company appear more in control of the information.

Overall, a successful and effective open enrollment process can have a dramatic impact on the relationship between employers and their employees. By catering to their needs and wants, employers will ultimately make the experience more enjoyable and worthwhile for their workers. As a result, they will feel more secure in their benefits decisions throughout the plan year.

Draft Instructions & Revised Draft 2015 Forms for IRS Reporting Requirements

2015 Draft Instructions for 6055 and 6056 Include Filing ExtensionsAs the summer starts to come to an end, the IRS has been very busy creating new ACA reporting requirements under their Code Sections 6055 and 6056 and updating the 2015 reporting forms. The newly drafted forms are now available and whether you are preparing these forms yourself or working with a third party administrator, such as a data processing company, we wanted you to be aware of the requirements.

08-17-15 Legal Alert - IRS Releases Draft 2015 Instructions for ACA Reporting FormsOn August 7, the Internal Revenue Service (IRS) released draft instructions and revised draft 1095-B and 1095-C forms to be used for Affordable Care Act (ACA) Minimum Essential Coverage (MEC) and Large Employer reporting in 2016. The IRS has posted the 2015 draft instructions and forms at as information only, and will post final versions at a later date.

The revised 2015 draft forms are generally unchanged from the versions released on June 19, 2015. However, the IRS made several changes to the 2014 final instructions, including:

  • “B” form instructions for applicable large employers – The draft instructions for forms 1094-B and 1095-B now allow applicable large employers (ALEs) the option to use the “B” forms to report coverage of individuals who are not considered full-time employees for any month during the calendar year.
  • “C” form instructions for applicable large employers – The draft instructions for forms 1094-C and 1095-C require that ALEs continue to report all employees enrolled in self-insured coverage on the “C” forms – as part of MEC reporting.
  • 30-day extension for IRS filing – An automatic extension is granted if Form 8809 is submitted to the IRS on or before the filing due date.
  • 30-day extension for providing forms to individuals – An extension may be granted by submitting a letter to the IRS on or before the due date for providing forms to individuals.
  • Details on how to file corrected forms – The draft instructions include details on filing corrected paper returns. Information on electronic filing corrections can be found on IRS Publication 5125.
  • Hand delivery – Both sets of reporting may be hand delivered to individuals.
  • Reporting supplemental coverage – The definition of a “plan sponsor” has been clarified for the purpose of reporting supplemental coverage by the same reporting entity as the health plan sponsor.
  • Reporting coverage offered under multiemployer plans – Simplified reporting now available for reporting offers of coverage for employers with multiemployer arrangements that qualify for relief.
  • Reporting on COBRA participants – Clarifications on how to report COBRA participants.

For more information on the final rules on this IRS information reporting, please read our Reporting Requirements Fact Sheet.


Draft Instructions & Forms

We will keep you informed when final instructions and forms are made available.

About This Alert. This alert is designed only to give general information on the developments actually covered. It is not intended to be a comprehensive summary of recent developments in the law, treat exhaustively the subjects covered, provide legal advice, or render a legal opinion. Morris & Reynolds Insurance are not attorneys and are not responsible for any legal advice. To fully understand how this or any legal or compliance information affects your unique situation, you should check with a qualified attorney.

Family Plans Must Embed Out-of-Pocket Limits in 2016

The Affordable Care Act (ACA) requires non-grandfathered health plans to limit an enrollee’s out-of-pocket costs for essential health benefits each year. This annual limit is often referred to as the “out-of-pocket (OOP) maximum.”

ACA FAQsRecent agency guidance will require the self-only OOP maximum to be embedded family coverage when the plan’s OOP maximum for family coverage exceeds the ACA’s limits for individual coverage. This requirement will take effect beginning with the 2016 plan year, when the OOP maximum for self-only coverage will be $6,850.

This guidance applies to all non-grandfathered group health plans, including self-funded plans and insured plans of all sizes.

While this change will have a significant impact on many employer-sponsored health care plans, high deductible health plans are likely to be affected the most. This is due to the fact that high-deductible family plans have higher cost-sharing limits. They are also typically designed to administer a single OOP limit on all family coverage with no underlying OOP maximum for each individual enrolled in the family plan.

Under the new guidance, many high-deductible family health plans will need to be modified so that a single individual’s OOP costs do not exceed the specified maximum. For instance, currently, a plan could have an $8,000 OOP limit for family coverage and require that limit to be satisfied before it covers expenses at 100 percent, even if one individual incurs all of the expenses.

According to the guidance, this type of plan design will no longer be permitted for non-grandfathered plans, and the plan would have to be amended so that each individual would not be required to pay more than the OOP maximum for individual coverage for essential health benefits.

The ACA’s excise tax on high-cost employer health plans (or the “Cadillac tax”) is set to take effect in 2018. Under this provision, employer coverage that exceeds certain dollar limits will be subject to a 40-percent excise tax.Bipartisan support is currently growing for a repeal of the Cadillac tax. Those who are advocating for repeal assert that the tax is no longer needed to help keep health care costs in check. They also argue that it will lead to reduced or eliminated benefits and higher costs for employees.With repeal far from certain, employers are already planning ahead for 2018 and making adjustments to benefits offerings to avoid the tax penalty.

IRS Issues New Q&As on Section 6056 Reporting
The Internal Revenue Service (IRS) recently released new Questions and Answers (Q&As) regarding Section 6056 reporting. These Q&As provide additional details on completing Forms 1094-C and 1095-C.

Under Section 6056, applicable large employers (ALEs) subject to the “pay or play” rules must report information to the IRS and full-time employees about the health coverage they offer. Reporting is first required in early 2016 for calendar year 2015.

The Q&As clarify existing requirements under Section 6056 and provide more guidance on specific aspects of reporting that had not been addressed previously. For example, the Q&As address reporting offers of COBRA coverage and reporting offers of coverage for employees who are newly hired or who terminate employment during a month. The Q&As also include examples that may be helpful when completing Forms 1094-C and 1095-C.

More Information
Stay tuned to for the latest news affecting your insurance needs, and stay in close contact to your professional agents and underwriters here at Morris & Reynolds Insurance. We will do our very best to guide you in the right direction, keep you informed and assist you for many years to come.

New Trade Act Quietly Increases ACA Reporting Penalties

bulletinThe Monday before the fourth of July, President Obama signed into law the Trade Preferences Extension Act of 2015, which contained several tax provisions in addition to the trade measures that were the focus of the bill. Among the tax provisions were changes that increase the penalties associated with failure to file or furnish correct “information returns and payee statements,” which include standard information returns, such as Forms W-2 and 1099, as well as the new reporting forms required by the Affordable Care Act (ACA). The following table summarizes the responsible parties and forms applicable to the ACA’s reporting requirements.


ACA reporting became mandatory for responsible entities starting in 2015. The first returns and statements will be provided in early 2016 reflecting the 2015 calendar year. Entities completing the employee statement (the 1095-B or 1095-C, as applicable) must provide one copy to employees and one to the IRS as part of the information return. Thus, a failure that relates to both the information return and employee statement may result in double penalties. For example, failure to send one copy of Form 1095-C to the employee and one copy to the IRS is considered two failures, which may trigger a $500 penalty. The IRS has stated that it does not intend to impose accuracy-related penalties on employers who complete the 2015 filings timely, as long as the employer was acting in good faith.

The table below reflects the current and revised penalty structure.


Filing Extensions
Employers should be able to obtain automatic extensions of time to file the ACA returns with the IRS; however, extensions of time to provide the employee statement (e.g., 1095-B or 1095-C) are more limited. It is our understanding that the IRS intends to revise form 8809—the existing extension form for W-2s and 1099s—to include the ACA forms as eligible for extension. Entities filing form 8809 before the returns are due are granted an automatic 30-day extension. An additional 30-day extension may be requested by submitting a second Form 8809 before the end of the first extension period. Requests for an additional extension of time to file information returns are not automatically granted. Generally, requests for additional time are granted only where it is shown that extenuating circumstances prevented filing by the date granted by the first request.

Extensions for Employee Statements Limited
Employers that require additional time to prepare the employee statements may request an extension of up to 30 days from the original due date (January 31) by submitting a letter to the IRS that contains certain information. There is not an automatic approval process for these types of extensions. The IRS is expected to release further information on the extension process for employee statements.
In the meantime, employers should work closely with their insurance broker and other trusted advisers when determining how their organization will address these new requirements.

More Information
Stay tuned to for the latest news affecting your insurance needs, and stay in close contact to your professional agents and underwriters here at Morris & Reynolds Insurance. We will do our very best to guide you in the right direction, keep you informed and assist you for many years to come.

About The Authors. This alert was prepared for Morris & Reynolds Insurance by Peter Marathas and Stacy Barrow. Mr. Marathas and Mr. Barrow are nationally recognized experts on the Affordable Care Act. Their firm, Marathas Barrow & Weatherhead LLP, is a premier employee benefits, executive compensation and employment law firm. They can be reached at or

ERISA: A Timeline for Compliance

ERISA Compliance Time LineWhen you offer retirement and health benefits to your employees, you need to make sure you’re providing the right documents to stay in compliance with the Employee Retirement Income Security Act of 1974 (ERISA).

ERISA requires that you provide several types of documents to the Department of Labor (DOL) and plan participants. Noncompliance can result in fines, so make sure you’re providing the right documents at the right times.

Here’s a quick overview of the documents you need to stay in compliance:

Plan Document
The plan document contains a description of the terms and conditions for the operation and administration of the plan. It must be provided within 30 days of a written request.

Summary Plan Description (SPD)
The SPD contains plan information, including the benefits, rights and obligations of the covered participant. It should be written in a style and format that can be easily understood by the average plan participant. The SPD should be provided within 90 days of the participant being covered by the plan or the beneficiary receiving benefits, or within 30 days of a written request.

Summary of Material Modification (SMM)
The SMM describes material changes to a plan and any changes in the information required in the SPD. An updated SPD satisfies the SMM requirement. The SMM or updated SPD must be distributed to participants and pension plan beneficiaries no later than 210 days after the end of the plan year in which the changes were made, or within 30 days of a written request.

Form 5500
The Form 5500 satisfies various annual reporting obligations that plan administrators must meet under ERISA and the Internal Revenue Code. Form 5500 may be filed electronically on the DOL website. This form is generally due by the last day of the seventh calendar month after the plan year ends, or within 30 days of a written request. See for details. Some plans are exempt from this requirement.

Summary Annual Report (SAR)
This report is a narrative report of the Form 5500 and includes a statement of the participant’s right to receive the annual report. Plans that are exempt from annual 5500 filing, as well as large and unfunded health plans, may be exempt from the SAR requirement. The SAR must be provided to participants and pension plan beneficiaries no later than 210 days after the plan year ends or two months after the Form 5500 due date.

More Information
For more information on how to stay ERISA compliant, contact Morris & Reynolds Insurance at 305.238.1000, or visit our website’s ERISA Compliance page.