Active or passive open enrollment: when employees must re-elect and when you can roll elections forward.
What each approach is, what it saves and what it risks, which benefits need an active choice and how to run a hybrid. Written for the owner or HR lead.
Two Ways To Run the Same Window
The choice affects workload, data quality and who falls through the cracks.
Active Enrollment
Every employee must log in and make elections every year. Nothing carries forward without a choice. This approach works well when you want fresh data and informed choices, but it needs a clear window, reminders and an easy way to log in. Plan for follow-up with employees who have not finished, since a missed election can leave them without coverage. Try our free spousal surcharge calculator to run the numbers for your own group.
Passive Enrollment
Current elections roll forward unless the employee changes them. Employees act only if something changes. It works best when plans, rates and contributions have not changed. Send a confirmation showing each person’s current plan and cost, and give employees a clear way to make changes before the window closes. Try our free open enrollment timeline calculator to check the rules for your own group.
A Hybrid
Passive in quiet years, active every few years or whenever plans change. Many employers settle here. A common pattern is to roll elections forward in a stable year and require an active election when something material changes. Put the schedule in writing so employees know in advance when they will need to act.
What Passive Enrollment Does Well
It saves effort when nothing is changing.
Less Work
HR fields fewer questions, and payroll sees fewer changes. Passive enrollment reduces the volume of enrollment forms, data entry and payroll corrections during the busiest weeks of the year. That time is often better spent answering questions from employees who actually face a change.
No Gaps from Inaction
Employees who forget to enroll do not lose coverage. This is the main safeguard of the passive approach. It protects employees who are away, busy or less comfortable with online systems, and it reduces the risk of someone discovering a coverage gap only after a claim.
Stable Participation
Voluntary benefits and dependent coverage stay in place instead of lapsing. Dependent coverage and voluntary products often depend on an election being on file. Rolling them forward avoids accidental drops, though you should still ask employees to confirm that the covered family members are correct.
What Active Enrollment Does Well
It forces a look at the facts.
Clean Data
Employees confirm dependents, beneficiaries and contact information. Errors surface before claims. A yearly review is a natural time to catch a divorced spouse, a child who has aged out or an outdated beneficiary. Fixing these before a claim or a death benefit is much easier than correcting them afterward.
Better Choices
When a plan changes, employees need to consider the new options instead of drifting. Without a prompt, employees can stay in a plan that no longer fits their needs simply because it is familiar. A short comparison of old and new options, with examples, helps people make a real choice.
Attestations
Spousal surcharge and tobacco attestations can be collected each year, with fresh statements. Collecting a fresh statement each year can help support the program and keep records current. Make sure the questions, wording and any consequences are described in the plan materials, and have counsel review them if you add a new attestation.
Benefits That Usually Need an Active Election
Some elections do not roll well.
Flexible Spending Accounts
Many plans require a new election each year. Some allow rolling forward with notice. Check your plan document. Because FSA elections are tied to the plan year, an employee who forgets to re-elect may find they have no account. Spell out in your enrollment materials whether your plan rolls forward and how employees can opt out.
HSA Contributions
Contribution amounts are tied to the year and the employee’s plan. A new election is common. Employees can often change HSA contributions during the year, but only if they are covered by a qualifying plan. Remind people to review the amount at enrollment, and send questions about eligibility and limits to a tax adviser.
A Plan That Changed
If a plan is discontinued or renamed, a roll-forward needs a clear mapping and notice. Show employees the old plan and the plan they will be moved to, with the cost difference, and give them time to choose something else. Avoid roll-forwards where the new plan differs in ways that would change a reasonable choice.
New Hires
New hires always make an initial election. Since a new hire has no prior election to carry forward, they need the full enrollment process from the start. Give them access to the same plan materials and decision tools that existing employees receive during open enrollment.
What Can Go Wrong
Both approaches have failure modes.
Surprise Premiums Under Passive
Employees who skip the materials may not notice a large increase or a plan change until payroll. Send a short notice showing the new cost per paycheck and any changes to the plan before the effective date. If a large change takes people by surprise, HR often hears about it for weeks afterward.
Missed Enrollments Under Active
Employees who ignore the window can be left with no coverage or lose voluntary benefits. Send reminders by more than one channel and give managers a list of who has not completed enrollment. Employees who work in the field or on shifts may need extra help, such as a paper form or an in-person session.
Weak Documentation
Whichever you choose, the plan document should say how elections are made and what happens if no choice is made. Gaps in the document are a common cause of disputes about whether a roll-forward was valid. Have your attorney or benefits adviser check that the document, the summary materials and your actual practice all match.
How a Hybrid Works
It balances effort and accuracy.
Passive in Stable Years
Roll elections forward when plans and rates are unchanged and send a short confirmation. The confirmation should list the plan, the cost and the covered family members, and tell employees how to change anything before the deadline. Keep a record of when it was sent so you can show employees were notified.
Active at Change
Require a new choice when a plan, carrier or contribution structure changes. A required choice gives employees a chance to compare the new structure with their needs, and it avoids placing someone in a plan they did not pick. Clearly explain what happens to anyone who does not respond.
Active Every Few Years
Run a full active enrollment every two to three years to refresh data. A full active enrollment on a set cycle refreshes dependents, beneficiaries and attestations, and gives employees a chance to rethink old choices. Announce the schedule early so employees expect it and HR can plan for the added workload.
The questions that come before the window opens.
Six questions employers bring us about open enrollment approaches.
Is passive enrollment allowed?
Yes, for most benefits, if the plan document provides for it and employees are given notice.
Can an FSA roll forward automatically?
Some plans allow it with notice. Many require a new election each year. Follow your plan document.
What if a plan is discontinued?
Map employees to the closest plan with clear notice, or require an active choice.
How often should we run active enrollment?
At least when plans change. Many employers do so every two to three years.
Does passive enrollment affect ACA reporting?
It does not change the reporting. The offers and coverage are the same.
Who should send the confirmation?
HR, with the carrier’s materials attached, so employees see their current elections and costs.
Ready? Send us your renewal, or talk it through with someone first. No cost, no obligation.
General information about open enrollment approaches, not legal advice. Plan-specific questions belong with benefits counsel and your carriers, and we will bring them in.
Related guides.
Changing Your Plan Year
What a short plan year does to deductibles and accounts.
Language Access and Benefits Communication
Reaching employees who read and speak other languages, and what the translation rules require.
Waivers and Opt-Out Payments
Handling employees who decline coverage, participation math and opt-out payment rules.
Open Enrollment Project
How to run the window as a dated project.
Section 125 Cafeteria Plans
How pre-tax elections work.
Employer Benefits Guides
All of our plain-language guides in one place.
Send us your renewal.
We’ll tell you whether it looks competitive, where we see opportunity, and the five questions we’d put to your carrier. No cost, and no obligation to move anything.
The renewal letter
Your current plan summary
Contribution split by tier
Enrolled counts by tier
Four documents — two more if your group is 50 or more. Nothing else; every extra one is a reason to postpone.
Laws and rules referenced
26 U.S.C. § 125 — Cafeteria plans: pre-tax premium payments, plan limits and nondiscrimination rules.
This page is general information, not legal or tax advice. Rules change and facts matter, so confirm your situation with counsel or a qualified advisor.
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