Navigating open enrollment notice requirements

Fall open enrollment is upon us, and plan sponsors and administrators are preparing to provide their employees with the required notices related to their health and welfare plans. Notice and disclosure obligations for health and welfare plans have become increasingly complex, with some information being required at initial enrollment and others required annually. Although insurers and third-party administrators may prepare or distribute these notices, ultimately the responsibility for compliance often rests with the plan sponsor or plan administrator. 

Some of the notices routinely included in open enrollment materials are listed below. 

• The Health Insurance Portability and Accountability Act of 1996 (HIPAA) Special Enrollment Notice: Notice regarding mid-year enrollment rules must be provided at or before the time the employee is initially offered the opportunity to enroll in the plan. 
• Children’s Health Insurance Program (CHIP) Notice – Notice of Eligibility for State Premium Assistance: Notice must be provided annually to employees who reside in a state that offers a premium assistance program under Medicaid or CHIP. 
• Medicare Part D Notice of Creditable Coverage: Notice is due before October 15 and may be sent with open enrollment materials. The notice must be provided to individuals enrolled or seeking to enroll in the plan who are eligible for coverage under Medicare Part D. Since it is often difficult to identify who is eligible for Medicare Part D, many employers provide the notice to all persons covered under the plan.
• Women’s Health & Cancer Rights Act (WHCRA) Notice: Notice regarding benefits for mastectomy-related reconstructive surgery and related conditions must be provided to participants annually. 
• Summary of Benefits and Coverage (SBC): Notice must be provided to individuals enrolled in the plan under several circumstances, including with initial and annual enrollment materials. 
• Wellness Program Notices – HIPAA requires that information about alternative standards available for receiving health-related rewards be included in any plan materials, describing the terms of the wellness program. The Americans with Disabilities Act (ADA) generally requires distribution of a notice about the collection and use of medical information in connection with a wellness program before such information is collected or any medical examination is conducted (and with enough time for the employee to decide whether to participate in the program). 
• HIPAA Notice of Privacy Practices: Notice must be provided to individuals covered under a group health plan at the time of enrollment in the plan, and availability of the privacy notice (or a full copy of the privacy notice) must be provided at least once every three years thereafter. Many plan sponsors will incorporate the HIPAA privacy notice (or information about its availability) into their annual open enrollment materials to facilitate compliance. 

There are model documents and templates available for many of these required notices, but often these will need to be customized to reflect the particular design and administrative process for the relevant plan. Plan sponsors should also consider applicable state law notice obligations. For example, under the Illinois Consumer Coverage Disclosure Act, employers must notify employees about which essential health benefits are and are not covered under the employer-sponsored health plan. 

It is becoming more common for employers to conduct the annual enrollment process online and they will often use electronic media to distribute legally required notices. The current Department of Labor safe harbor for electronic distribution of health and welfare plan materials would permit use of the employer’s computer systems to make the disclosure to eligible employees with work-related computer access. To use this safe harbor, the employee must be able to access the documents at a location where the individual is reasonably expected to perform employment duties and the individuals’ access to the electronic system is an integral part of those employment duties. 

Alternatively, employers can obtain the employee’s consent to distribute materials electronically. If electronic distribution is used, employers should identify individuals who may not have electronic access and how to provide the disclosures through an alternative means (e.g., regular U.S. mail or hand delivery). Groups that may be affected include employees on leave who may not immediately have work-related electronic access, COBRA participants and employees whose job functions do not require regular interaction with electronic systems (e.g., cleaning staff or cafeteria workers). Keep in mind that some required notices (e.g., the HIPAA privacy notice and COBRA notices) may be subject to special electronic disclosure rules. 

Related: Open enrollment season: A time to show your employees you care

Separate from the steps employers take to ensure enrollment materials comply with the various legally required disclosures, employers will want to make sure those materials are robust and effective communications to facilitate eligible employees making informed decisions about their benefit plan options. Beyond enrollment materials, sponsors of health and welfare plans have numerous other notice and disclosure obligations.