If you offer employer-sponsored insurance to your employees, you should be familiar with some of the health coverage terminology used in the workplace. Open enrollment is one important term related to insurance benefits. What is open enrollment?
What is open enrollment?
Open enrollment is an annual period where individuals can enroll in, make changes to, or cancel their insurance plans. Open enrollment applies to employees who want to make changes to their employer-sponsored insurance as well as individuals who participate in the government’s Marketplace health plans. Typically, employees are not allowed to change their insurance plans outside of open enrollment.
As an employer who offers insurance benefits, you are responsible for conveying benefit-related information to employees during open enrollment.
Notify your employees about open enrollment before it starts. That way, employees can prepare for coverage changes. And, you must tell employees how long open enrollment lasts at your business. Let employees know that, for the most part, they cannot change their plans outside of open enrollment.
Tell employees about their insurance plan options for adding, changing, or removing coverage.
Discuss which employees are eligible for adding insurance benefits. Talk about single plans as well as family plans. Explain participation rules for employees’ spouses.
Employees can switch plans during health insurance open enrollment. You may offer health plans with varying deductibles, copays, coverage, and premiums. Make sure employees know how much they need to contribute each pay period to the plans. And, explain out-of-pocket expenses employees may need to pay when they seek medical care.
For example, employees might have the option to choose between a high-deductible health plan (HDHP) and a traditional preferred provider organization (PPO). You would explain that HDHPs have higher deductibles and less expensive premiums than PPOs, then give details about payment differences.
If employees want to cancel their insurance plan, tell them when their current coverage ends.
What can employees change during open enrollment?
During open enrollment, employees can make changes to any insurance-related plans you offer, including health, vision, dental, life, and disability insurance plans. They can also add, change, or remove HSA (health savings account) and FSA (flexible spending account) plans.
One note on FSAs: under IRS Section 125 rules, employees generally must make a new FSA election every plan year. Their choice does not roll over automatically the way a medical plan often does, so employees who skip open enrollment may lose that pre-tax benefit for the year.
Does open enrollment apply to a 401(k)?
Not in the same way. There is no legally required open enrollment period for retirement plans. When employees can join a 401(k) or change their contribution rate is set by your plan document, and most plans let employees enroll or adjust their deferral at any time. Some plans limit new enrollments to specific entry dates, such as the first day of each quarter, which can feel like open enrollment even though it is not tied to the fall benefits season.
Retirement still tends to get bundled into the same window. Employees are already reviewing their paycheck deductions, so it is a natural time to encourage saving. And if your plan uses automatic escalation, the annual contribution increase usually takes effect January 1, alongside the new health plan year.
One more January detail: the IRS contribution limit resets each calendar year. Employees who hit the cap in the fall will see 401(k) deductions start again with the first paycheck of the new year, whether or not they made changes during open enrollment.
When is open enrollment?
There isn’t one universal open enrollment period. The dates depend on the type of health coverage, the plan year, and, in some cases, the state where coverage is purchased.
- Employer-sponsored health plans. Open enrollment is generally tied to the employer’s plan year and policy renewal date. Many small businesses have plans that renew January 1, so their open enrollment often takes place in October or November. Employers with a mid-year renewal will typically hold open enrollment at another time of year. Your insurance carrier or broker can confirm the exact dates and enrollment window for your plan.
- The individual Health Insurance Marketplace (HealthCare.gov). Open enrollment currently runs from November 1 through January 15. Employees generally need to enroll by December 15 for coverage beginning January 1. Enrollments completed from December 16 through January 15 generally begin February 1. States that operate their own Marketplace may use different enrollment deadlines. This is especially important if you offer an ICHRA or QSEHRA, since participating employees purchase their own individual health insurance coverage.
- Medicare. Medicare open enrollment runs October 15 through December 7 each year, with coverage changes taking effect January 1. Employees who are eligible for Medicare may be comparing Medicare coverage with coverage available through your employer-sponsored plan.
- Small Business Health Options Program (SHOP). SHOP does not have the same annual open enrollment window as the individual Marketplace. Eligible small employers can generally begin offering SHOP coverage at any time during the year.
Marketplace enrollment dates are worth checking each year before communicating deadlines to employees. A federal rule finalized in 2025 would have shortened the HealthCare.gov open enrollment period for 2027 coverage, but a federal court vacated that provision in June 2026.
Can employees make changes outside of the open enrollment period?
Under specific circumstances, employees can change their insurance plans outside the open enrollment period. When an employee has a qualifying life event, they have a limited amount of time to add, remove, or cancel coverage.
Examples of qualifying life events include when an employee gets married or divorced, has a baby, or loses coverage.
Unless an employee has a qualifying life event, they cannot make changes to their insurance plans outside of open enrollment.
Open enrollment by the numbers
A few figures put the season in context for small business owners:
- Small firms are less likely to offer health benefits. In 2025, 59% of firms with 10 to 199 workers offered health benefits, compared with 97% of firms with 200 or more workers, according to the KFF Employer Health Benefits Survey. Because most workers are at larger companies, 91% of workers are still employed by a firm that offers coverage.
- Premiums keep climbing. The average annual premium reached $9,325 for single coverage and $26,993 for family coverage in 2025, up 5% and 6% from the prior year. Workers paid an average of $6,850 toward family premiums, about 26% of the total (KFF).
- Employees rush the decision. In a Voya Financial survey, 67% of benefits-eligible employees said they spend 30 minutes or less reviewing their options, and 27% wait until the final week before the deadline. Clear, early communication from you makes a real difference.
Should you shop for a new plan this year?
Renewing your current health plan may be the easiest option, and sometimes it is the best fit. But open enrollment is also a good time to make sure your plan still works for your business and your employees.
Here are a few signs it may be worth comparing your options:
- Your renewal rate increased significantly. If your new premium is noticeably higher, ask your broker to compare plans and rates from other carriers. Even if you ultimately stay with your current plan, shopping around can help you understand whether your renewal is still competitive.
- Your headcount changed. Growing businesses may face different health coverage requirements and options. If you are approaching 50 full-time equivalent employees, pay particular attention to Affordable Care Act employer requirements. Smaller employers may also have options such as a QSEHRA.
- Your workforce has changed. The plan that worked for your team a few years ago may not be the best fit today. Changes in employees’ ages, family situations, and health care needs can affect which premiums, deductibles, networks, and benefits employees value most.
- Employees are asking for benefits you do not currently offer. Requests for dental, vision, mental health coverage, or other benefits can be a sign that it is time to revisit your package. Some voluntary benefits can also be offered with little or no employer contribution.
- You are offering health benefits for the first time. Start shopping early. Comparing carriers, plan designs, costs, contribution strategies, and enrollment requirements takes time, and giving yourself a head start can make the process much easier.
- You have not compared plans in several years. If you have renewed the same policy year after year without looking at alternatives, it may be time for a fresh comparison. Rates, provider networks, and plan options can change considerably over time.
Open enrollment and payroll
Changes to employee health insurance can also affect how you run payroll. With employer-sponsored health insurance, an employee’s share of the premium is typically withheld from their gross wages through payroll deductions.
If an employee enrolls in coverage, changes plans, adds or removes dependents, or drops coverage altogether, their payroll deduction may change. Depending on how the benefit is set up, changes to insurance deductions or employer contributions can also affect the employee’s tax liability.
During open enrollment, make sure employees complete the appropriate benefit enrollment or change forms. You’ll need those forms to update their coverage and payroll deductions, and you should keep them with your benefits records for documentation.
Managing employee benefit contributions doesn’t need to be overwhelming. With Patriot’s online payroll software, simply enter employee information and let our software withhold deductions from their wages. Get your free trial today!
This article has been updated from its original publication date of October 3, 2018.
This is not intended as legal advice; for more information, please click here.
