Open Enrollment: What Small Businesses Need to Know About the Affordable Care Act

Employer open enrollment laws and rules

Judy Kamens, a compliance specialist at Lawley Insurance, prepared a health insurance checklist that outlines out-of-pocket maximums, preventative care benefits and limits on health flexible savings account contributions. While she compiled that checklist in 2020, Business News Daily has updated the following to reflect 2024’s changes. 

Out-of-pocket maximums

The United States Department of Health and Human Services and the Centers for Medicare and Medicaid Services updated the 2024 limits on cost-sharing for essential health benefits (EHB).

The out-of-pocket maximum that covered employees may be responsible for in 2024 is $9,450 for self-only coverage and $18,900 for family coverage. This represents a notable increase from the 2023 limits — $9,100 and $18,200, respectively.

Employees should review their plans’ out-of-pocket maximums and guarantee that they comply with the Affordable Care Act’s (ACA’s) limits for the 2024 plan year.

Plans with a high deductible, also known as a high-deductible health plan (HDHP), need to be compatible with a health savings account (HSA). As part of the law, the plans’ out-of-pocket maximum must be lower than the ACA’s limit, said Kamens. On the 2024 plans, the out-of-pocket maximum limit for HDHPs is $8,050 for self-only coverage and $16,100 for family coverage.

If a plan uses multiple services providers to administer benefits, you should make sure that plan “coordinates all claims for EHB across the plan’s service providers or divides the out-of-pocket maximum across the categories of benefits, with a combined limit that does not exceed the maximum [for 2024],” added Kamens.

Preventive care benefits

Under the ACA, most health insurance policies must cover certain preventative care services without imposing cost-sharing requirements such as deductibles, copayments or coinsurance. Adults and children qualify for different preventative care benefits, including:

1. Alcohol misuse screening and counseling for adults.
2. Blood pressure screening for adults.
3. Hepatitis B screening for people at high risk, including people from countries with 2 percent or more Hepatitis B prevalence and U.S.-born people not vaccinated as infants and with at least one parent born in a region with 8 percent or more Hepatitis B prevalence.
4. Depression screening for adults.
5. HIV screening for adults.
6. Diet counseling for adults at higher risk for chronic disease.
7. Autism screening for children at 18 and 24 months.
8. Fluoride varnish for all infants and children as soon as teeth are present.
9. Gonorrhea preventive medication for the eyes of all newborns.
10. Iron supplements for children ages 6 to 12 months at risk for anemia.

There are more than 50 different preventative care services. For information on what they are, visit the U.S. Preventive Services Task Force.

Health flexible savings accounts

A flexible spending account (also known as a flexible spending arrangement or FSA) is a type of savings account into which employees disburse a portion of their pretax paycheck for select out-of-pocket healthcare costs. Employers aren’t required to fund workers’ FSAs, but some contribute as an employee benefit. The maximum amount an employer contributes should not exceed the ACA’s maximum limit for the plan year.

For 2024, the IRS has announced the following:

• The annual contribution limitation: For the calendar year 2024, the annual limit on deductions for an individual with self-only coverage under a high-deductible health plan is $4,150. For an individual with family coverage under a high-deductible health plan, the limit is $8,300.
• The high-deductible health plan: For the calendar year 2024, a high-deductible health plan is defined as a health plan with an annual deductible that is not less than $1,600 for self-only coverage or $3,200 for family coverage and annual out-of-pocket expenses (deductibles, copayments and other amounts but not premiums) that do not exceed $8,050 for self-only coverage or $16,100 for family coverage.

Employer open enrollment deadline obligations

Employers often wonder what they’re required to do if an employee misses open enrollment. The answer may surprise you: absolutely nothing.

Employers are not legally responsible for employees who miss the open enrollment deadline. Of course, employees may be upset and this can cause extra stress and paperwork for your administrative staff but you aren’t accountable legally. However, it’s still a best practice to keep employees informed about upcoming deadlines. 

Finding the right plans for your business

Every business’s needs are different, so it’s important to shop around for coverage. Here’s what to keep in mind as you review benefits packages. 

Group or individual/family plan

When considering health insurance benefits, most small business owners aren’t aware of all their options. Group health insurance is the traditional means of providing employees with insurance benefits. However, employers with small teams may consider individual or family health insurance plans to provide employees with coverage tailored to their needs. This may save the business owner significant administrative time and expense.

This type of plan may also give you access to substantial government subsidies that could lower the cost of coverage. A health insurance agent can help you assess whether group or individual/family insurance is the best structure for your business and your employees.

Consider costs to you and your employees

For health insurance, it’s especially important to consider the overall price tag. Choosing a plan that is too costly for your employees could trigger big fines. In 2024, the fine per full-time employee for failing to provide affordable coverage is $4,460. So don’t look to cut costs by shifting too much of the financial burden to your workers. 

“The biggest choice employers have is how much they are willing to contribute to the plan and how much each employee is going to contribute,” said Arthur Tacchino, J.D., founder of SyncStream. “Not only does the employer have to offer coverage, but they [also] have to offer [coverage that] is considered affordable.”

Listen to your workforce

John Neumaier, regional president of the Atlantic and Northeast region for Arthur J. Gallagher & Co., a global insurance broker and risk management service firm, advised that before you make any decisions, listen to your employees so you understand their needs and preferences.

“Quarterly employee-benefits roundtables are a great way to engage employees and solicit feedback … since the perceived value of a benefits program can vary greatly among different demographic groups within an employer’s workforce,” Neumaier told Business News Daily.

Lesley Grady, vice president of Enterprise Practice at Sequoia Consulting Group, agreed that employees feel empowered when they have choices but warned that too many choices are daunting and can lead employees astray. Your staff needs options but those options need to tie to the company’s strategy and workforce culture, she said.

Communicating benefits options to your staff

Choosing benefits packages is only half the battle. Your employees also need to understand them. Communicating the plans to your employees clearly and simply is the key to helping workers take full advantage of their benefits.

John Park, partner at Lemhi Ventures, said many people find the process of benefits enrollment difficult and complex. This is especially true when you introduce changes, which lead to an increase in confusion and anxiety, he said.

“Employers are overconfident about communication regarding benefits,” Park said. “Most employers only communicate once per year, during open enrollment, [but] communication should be ongoing about enrolling in and using benefits.”

Our sources offered their advice on discussing benefits with your employees.

“Understand the forms and what you’re reporting. One of the biggest struggles we’ve had as a company with employers we’ve worked with is that they didn’t understand the tax forms themselves and then couldn’t answer inquiries from their employees. The better the employer can understand compliance and [the] forms, the more likely they are to avoid penalties and [to] better field questions.” ― Arthur Tacchino

“Educate your employees on basic benefits terminology ― deductible, premium, etc. ― during each open enrollment cycle. Employees who fully understand their benefits packages are more likely to appreciate them.” ― George Katsoudas, senior vice president of Compliance Counsel, Arthur J. Gallagher & Co.

“As employers increasingly ask their employees to be better consumers of healthcare, companies must equip them with the information necessary to make wise cost decisions. A good first step is to ensure that employees know how to access the free transparency tools provided online by most medical carriers. Provide employees with a breakdown of medical and pharmaceutical cost increases to avoid sticker shock.” ― John Neumaier 

“Give people the combination of choice and personal accountability for their healthcare. Part of this is a benefit design that promotes financial responsibility [and] utilizing their benefits in the most effective way. In the long term, it will result in better choices and behavior changes that will lead to better health and lower costs.” ― John Park

For more advice on creating a great benefits package for your employees, visit this Business News Daily guide.

Open enrollment tips

Understanding open enrollment could help you attract — and maintain — the most skilled employees in your industry. In the weeks leading up to open enrollment, small business owners should take the time to review any changes in open enrollment guidelines or rules for the upcoming year. 

The ACA Marketplace offers a wide range of coverage options — consider your employees’ needs and incorporate their feedback as you make your decisions. Benefits enrollment is also often challenging for many employees. 

Whenever possible, try to anticipate possible questions and stumbling blocks. By offering valuable benefits and careful guidance through open enrollment, your business can show your employees that you hear their concerns and appreciate their contributions.

Adam C. Uzialko and Cailin Potami also contributed to this article. Some source interviews were conducted for a previous version of this article.