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Insurance open enrollment is normally a period when insurance companies allow people to make decisions regarding their plans. Those decisions can be to add, drop, or change coverage for health insurance, disability insurance, or life insurance. The opportunity may be extended to new or existing customers.
Many insurance companies do not allow their customers to drop coverage whenever they want. Many also do not accept new customers at the customers’ convenience. Instead, they force people to wait until an allotted period known as insurance open enrollment.
Changes to existing coverage are also commonly limited to the insurance open enrollment period. There are many reasons a person may want to change her benefits. For example, one spouse may have been laid off and now needs coverage through the other. It is also possible that family members that were once carried on a policy can receive better or cheaper coverage elsewhere.
Sometimes it is simply a matter of having chosen the wrong plan initially. This is common with health insurance when people chose between HMOs and PPOs. Insurance open enrollment also allows the opportunity to eliminate certain types of coverage. For example, a person may wish to keep her health insurance but drop her dental coverage. Whatever the reason for the changes, a person is often restricted from making them until the insurance open enrollment period.
There are several qualifying events that can afford a person the opportunity to make changes outside of open enrollment. These include marital status changes such as marriage or divorce. It also includes the birth or adoption of a child.
The frequency of insurance open enrollment can vary from one insurance company to another. It is common, however, for it not to occur more than twice per year. For some companies the event is only once annually.
Employees are often given a full calendar month to do whatever they need to do in this regard. Changes may not go into effect immediately. It is not uncommon for a person to have to wait another calendar month to receive new benefits or for changes to be reflected.
Employees eligible for coverage generally have certain rights with regards to insurance open enrollment. To begin with, all eligible employees should be notified of the event. Those people should be given an Explanation of Benefits so they can understand their options and make wise choices. Insurance companies are also generally required to accept all new and eligible applicants.
@indemnifyme - You're right, being able to enroll in an insurance plan at anytime is much better for customers. I personally think open enrollments are the most ridiculous thing I've ever heard of as far as employee benefits.
When my boyfriend got his last job he was hired right after the open enrollment period. So he had to wait almost another six months in order to get insurance! During that time he got really sick and ended up with some huge medical bills. If he had been able to enroll in the company health insurance plan when he was hired that never would have happened!
As the article stated this usually only applies to life, health and disability insurance. For other types of insurance such as car insurance and homeowners insurance you can change or cancel your insurance anytime you please. I think this works much better for customers than having benefits open enrollment.
One thing insurance companies usually don't do is apply discounts during the policy period. Some customers become eligible for certain discounts such as a retirement discount or a homeowners discount during the policy period. They can inform their insurance company of the change but the premium usually won't go down until renewal.
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