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.

Consumer Reports and the Fair Credit Reporting Act

Consider the following situations that you may encounter in your hiring and promotion activities:

  • Your advertisement for cashiers nets 100 applications. You want credit reports on each applicant. You plan to eliminate those with poor credit histories. What are your obligations?
  • You are considering a number of your long-term employees for major promotions. Can you check their consumer reports to ensure that only responsible individuals are considered?
  • A job candidate has authorized you to obtain a credit report. The applicant has a poor credit history. Although the credit history is considered a negative factor, it’s the applicant’s lack of relevant experience that’s more important to you. You turn down the application. What procedures must you follow?

As an employer, you may use consumer reports when you hire new employees and when you evaluate employees for promotion, reassignment and retention— as long as you comply with the Fair Credit Reporting Act (FCRA). The FCRA is designed primarily to protect the privacy of consumer report information and to guarantee that the information supplied by consumer reporting agencies is as accurate as possible. The Consumer Financial Protection Bureau is the federal agency responsible for enforcing the FCRA.

Consumer reports are a valuable resource for making hiring and other employment decisions, but employers have regulations they are required to follow.

Employers who use consumer reports must ensure that individuals are aware that consumer reports may be used for employment purposes and agree to such use, and individuals are notified promptly if information in a consumer report may result in a negative employment decision.

Employers should also review state laws related to consumer reports. Some states restrict the use of consumer reports for employment purposes.

What is a Consumer Report?
A consumer report contains information about an individual’s personal and credit characteristics, character, general reputation and lifestyle. To be covered by the FCRA, a report must be prepared by a legitimate consumer reporting agency (CRA). Employers often do background checks on applicants and get consumer reports during their employment. Some employers only want an applicant’s or employee’s credit payment records, others want driving records and criminal histories. For sensitive positions, it’s not unusual for employers to order investigative consumer reports— reports that include interviews with an applicant’s or employee’s friends, neighbors and associates. Credit background, references, past employment, social security, work habits, education, drug testing, judgments and liens, sex offender lists, criminal backgrounds, driving records, and military records are all consumer reports if they are obtained from a CRA.

Applicants are often asked to give references. Whether verifying such references is covered by the FCRA depends on who does the verification. A reference verified by the employer is not covered by the FCRA; a reference verified by an employment or reference checking agency (or other CRA) is covered. Section 603(o) of the FCRA provides special procedures for reference checking; otherwise, checking references may constitute an investigative consumer report subject to additional FCRA requirements.

Key Provisions of the FCRA
The FCRA includes several key provisions concerning the use of consumer reports.

Employee notice and authorization: Before you can get a consumer report for employment purposes, you must notify the individual in writing—in a document consisting solely of this notice—that a report may be used.

Employers also must get the individual’s written authorization before asking a CRA for the report, and special procedures apply to the trucking industry. If you are requesting medical information, the individual’s authorization must specifically state his or her consent to release such information.

When requesting a credit report from a CRA, you must certify that you will inform the individual of his or her rights under the FCRA and agree not to use the information in violation of state or federal employment laws.

Action based upon credit information: When you receive a credit report from a CRA, you are not required to release the report to the employee unless the report prompts you to make an “adverse action”—denying a job application, reassigning or terminating an employee, denying a promotion or access to company benefits, or other discipline. Before you take the adverse action, you must first give the individual a disclosure that includes a copy of the individual’s consumer report and a copy of “A Summary of Your Rights Under the Fair Credit Reporting Act”—a document prescribed by the Consumer Financial Protection Bureau. This document is available at the Federal Trade Commission’s (FTC) website, The CRA that furnishes the individual’s report will give you the summary of consumer rights.

After you’ve taken an adverse action, employers must give the individual notice—orally, in writing or electronically—that the action has been taken in an adverse action notice. The notice must contain the following information:

  • The name, address and phone number of the CRA that supplied the report.
  • A statement that the CRA that supplied the report did not make the decision to take the adverse action and cannot give specific reasons for it.
  • A notice of the individual’s right to dispute the accuracy or completeness of any information the agency furnished.

Before giving you an individual’s consumer report, the CRA will require you to certify that you are in compliance with the FCRA and that you will not misuse any information in the report in violation of federal or state equal employment opportunity laws or regulations.

An individual can request a copy of his or her credit report from the consumer reporting agency within 60 days of any adverse employment action based on the report at no cost. Employers should notify individuals of their rights to dispute the information contained in the credit report. CRAs must reinvestigate the accuracy of the disputed information within 30 days of the dispute without cost to the individual. If an applicant or employee notifies the employer that he or she is challenging information in the report, the employer should not make a final decision on the employment status of the applicant or employee until after that person has had a reasonable opportunity to address the information contained in the report. Employers must also make sure that they properly dispose of all “consumer information” obtained from consumer reports.

Investigative Reports: Employers who use “investigative reports”—reports based on personal interviews concerning a person’s character, general reputation, personal characteristics and lifestyle—have additional obligations under the FCRA. These obligations include giving written notice that the employer may request or have requested an investigative consumer report, and giving a statement that the person has a right to request additional disclosures and a summary of the scope and substance of the report.

In Practice
Here is information on how to apply these general requirements to the examples listed in the introduction of this article:

  • Your advertisement for cashiers nets 100 applications. You want credit reports on each applicant. You plan to eliminate those with poor credit histories. What are your obligations?
    • You can get credit reports—one type of consumer report—if you notify each applicant in writing that a credit report may be requested and if you receive the applicant’s written consent. Before you reject an applicant based on credit report information, you must make a pre-adverse action disclosure that includes a copy of the credit report and the summary of consumer rights under the FCRA. Once you’ve rejected an applicant, you must provide an adverse action notice if credit report information affected your decision.
  • You are considering a number of your long-term employees for major promotions. Can you check their consumer reports to ensure that only responsible individuals are considered?
    • You cannot get consumer reports unless the employees have been notified that reports may be obtained and have given their written permission. If the employees gave you written permission in the past, you need only make sure that the employees receive or have received a “separate document” notice that reports may be obtained during the course of their employment—no more notice or permission is required.
    • If your employees have not received notice or given you permission, you must notify the employees and get their written permission before you get their reports. In each case where information in the report influences your decision to deny promotion, you must provide the employee with a pre-adverse action disclosure. The employee also must receive an adverse action notice once you have selected another individual for the job.
  • A job candidate has authorized you to obtain a credit report. The applicant has a poor credit history. Although the credit history is considered a negative factor, it’s the applicant’s lack of relevant experience that’s more important to you. You turn down the application. What procedures must you follow?
    • In any case where information in a consumer report is a factor in your decision—even if the report information is not a major consideration —you must follow the procedures mandated by the FCRA. In this case, you would be required to provide the applicant a pre-adverse action disclosure before you reject his or her application. When you formally reject the applicant, you would be required to provide an adverse action notice.

There are legal consequences for employers who fail to get an applicant’s permission before requesting a consumer report or who fail to provide pre-adverse action disclosures and adverse action notices to unsuccessful job applicants. The FCRA allows individuals to sue employers for damages in federal court. A person who successfully sues is entitled to recover court costs and reasonable legal fees. The law also allows individuals to seek punitive damages for deliberate violations. In addition, the FTC, other federal agencies and individual states may sue employers for noncompliance and obtain civil penalties.

More Information
For more information on the FCRA, or if you have any other questions concerning compliance, contact the experts at Morris & Reynolds Insurance.

IRS Reverses Course on HRA Reporting

The IRS release updated instruction for the 2015 ACA reporting forms on September 17th 2015 and reversed its earlier guidance regarding reporting for HRAs.

Per the instructions, an employer with an insured major medical plan and HRA coverage for which an individual is eligible because the individual enrolls in the insured major medical plan is not required to report the coverage under the HRA for an individual covered by both arrangements. If an individual is covered by an HRA sponsored by one employer and a non-HRA group health plan sponsored by another employer (such as spousal coverage), each employer must report the coverage the employer provides.

This is welcome relief for employers that provide HRA coverage to employees enrolled in their fully insured group health plan, as separate reporting is not required for the HRA.

Section 6055 and 6056 Filing Extensions & Electronic Reporting Waiver Available HCR Employer Reporting of Health Coverage - Code Sections 6055 and 6056

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.

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.