Open enrollment is one of the busiest times of year for HR teams. It’s a high-stakes period where missteps can frustrate employees and even create legal risk for employers. Clear communication, timely notices, and strong administrative processes are all essential for keeping things on track.
Here are five of the most common mistakes employers make during open enrollment—and how to avoid them.
Failing to Communicate Employee Benefit Changes Clearly
Employee benefit offerings evolve each year, whether because of employer strategy, insurance company changes, or compliance with state and federal rules. Premiums, deductibles, copayments, and covered services can all shift.
Employees need clear, timely information to make informed choices. Start early, use multiple channels, and keep messaging simple. Real-world examples can help employees see how changes affect them.
For plans subject to the Employee Retirement Income Security Act (ERISA), updates must be communicated through a revised Summary Plan Description (SPD) or a Summary of Material Modifications (SMM). Following and updating plan documents is not just a best practice—it’s a fiduciary duty.
Skipping Required Notices
Open enrollment is a convenient time to distribute required health plan notices. Some are mandatory annually, while others are tied to enrollment. Key examples include:
- Summary of Benefits and Coverage (SBC) – must be provided to all who enroll or reenroll during an open enrollment period.
- Children’s Health Insurance Program (CHIP) Notice – for employees in states offering premium assistance.
- COBRA Initial Notice – must be sent to new participants and certain dependents within 90 days of coverage.
- Women’s Health and Cancer Rights Act (WHCRA) Notice – informs participants of mastectomy-related benefits.
- Medicare Part D Creditable Coverage Notice – employers must disclose to individuals who are eligible for Medicare Part D whether the health plan’s prescription drug coverage is creditable.
- HIPAA Privacy Notice – self-insured health plans must maintain and provide their own Privacy Notices.
Bundling notices into open enrollment packets helps employers stay compliant and reduces administrative headaches.
Overlooking Certain Eligible Individuals
Open enrollment materials must reach everyone who is eligible—not just active employees. That includes employees on leave, furloughed workers with benefits eligibility, and COBRA beneficiaries.
Employers should use a multichannel strategy—such as mail, email, and internal portals—and keep records of when and how notices were distributed. These records can be critical if questions or disputes arise later.
Underestimating Election Deadlines
Open enrollment should end well before the new plan year begins. This gives time to confirm elections, process enrollments, and complete required testing.
Under Section 125 rules, cafeteria plan elections generally must:
- Be made before the plan year starts,
- Take effect prospectively, and
- Remain irrevocable until the next plan year (with limited exceptions for life events).
Missed deadlines or incorrect elections are difficult—sometimes impossible—to fix. Employers should encourage early participation and reinforce deadlines often.
Missing Wellness Program Requirements
Wellness incentives and surcharges tied to health factors (like tobacco use or fitness goals) must comply with HIPAA’s nondiscrimination rules. This includes offering a reasonable alternative standard for those who cannot meet the original requirement and disclosing that option in all program materials.
Failure to include this disclosure has led to lawsuits and enforcement actions. Employers offering health-contingent wellness programs should carefully review their program language and ensure compliance.
Final Thoughts
Open enrollment sets the tone for the experience employees have with benefits in the year ahead. Avoiding common compliance pitfalls—like unclear communication, overlooked notices, missed deadlines, and gaps in wellness program rules—helps protect employers while building employee trust.
A proactive, well-documented process not only reduces compliance risk but also makes employees feel informed and supported when making important decisions about their benefits.
Contact your Leavitt Group insurance advisor to ensure your next open enrollment is clear, compliant, and stress-free.
