What Your Employees Get Wrong at Open Enrollment
Key takeaways
- Passive rollover is the most common mistake. When a system defaults employees into last year’s elections, most take the default even when the plan changed underneath them, and many 2027 plans are changing.
- Employees who contribute below the full retirement match leave compensation you already budgeted on the table. Showing the match in dollars fixes more of this than any reminder.
- The FSA and HSA distinction is the most misunderstood item in most benefits programs. For 2027 the HSA limits are $4,500 self-only and $9,000 family, while an unspent health FSA balance can still be forfeited.
- Stale beneficiary designations are the quietest failure in the package and the hardest to fix after the fact.
- Most employees do not know which life events allow a mid-year change. Publishing your plan’s list and deadline heads off missed windows. Capitol Benefits reviews enrollment materials for employers across Maryland, DC and Northern Virginia.
Most open enrollment advice is about process: start earlier, shorten the presentation, build a hub. That matters, and we cover it in our open enrollment tips for HR leaders.
This is the other half. Whatever your process looks like, employees make the same handful of decisions badly every year, and the same questions arrive at HR every January. The pattern is consistent enough to design around, which means your materials can head off most of it.
It matters more this fall. Many employers are absorbing the largest health cost increases in years for 2027, and that usually means plan design changes. An employee who rolls over without looking may end up with a higher deductible, a different network or a new drug tier they never noticed.
The Five Decisions Employees Get Wrong
| What happens | Why it happens | What to put in your materials |
|---|---|---|
| Rolling over last year’s elections without looking | The system defaults to it and nothing forces a review | A short, specific list of what changed this year: premiums, deductibles, networks and the formulary. Not a note that says please review. |
| Contributing below the full retirement match | The match formula is stated once, as a percentage, in a document nobody opens | The match shown in dollars at two or three real salary levels, with the contribution rate needed to capture it. |
| Treating an FSA like an HSA | The names are similar and both are described as pre-tax accounts | A side-by-side comparison: which one you offer, whether funds roll over, and what happens to the balance if they leave. |
| Never updating beneficiaries | No prompt exists and the form is filed somewhere they cannot see | A direct instruction to open and confirm the designation this year, with the link. Marriage, divorce and births do not update it automatically. |
| Missing a qualifying life event window | Nobody knows the list or the deadline until they need it | Your plan’s list of qualifying events and the number of days employees have to report them. Thirty days is common, but publish yours. |
Where the Money Actually Leaks
Two of these mistakes have a direct cost to the employee that you are already funding.
The unclaimed match. You budgeted for it. If an employee contributes below the threshold, that money is simply not spent, and the employee does not realize they declined part of their compensation. Stating the match in dollars rather than percentages is the highest-return sentence in most enrollment packets.
Account confusion. An employee who elects a large health FSA thinking it works like an HSA can forfeit what is left at year end, beyond any carryover or grace period the plan allows. That is a real loss, it feels like the company took their money, and one comparison table prevents it.
FSA vs. HSA: The Comparison Employees Need for 2027
- HSA: Available only with an HSA-qualified high-deductible health plan. The account belongs to the employee, rolls over indefinitely and goes with them when they leave. For 2027 the contribution limits are $4,500 for self-only coverage and $9,000 for family coverage, plus a $1,000 catch-up at age 55 and older. The plan’s minimum deductible for 2027 is $1,750 self-only and $3,500 family.
- Health FSA: Owned by the plan, not the employee. Unused funds are generally forfeited at year end unless the plan offers a limited carryover or a grace period, and the balance is usually lost at termination. The IRS sets the annual limit each fall, so confirm your plan’s 2027 figure.
- Dependent care FSA: Separate from health accounts and used for child or dependent care. The household limit rose to $7,500 beginning in 2026, which many employees have not caught.
The Beneficiary Problem Deserves Its Own Reminder
Group life insurance and retirement accounts pass by beneficiary designation, not by will. A designation naming a former spouse can control even when the will says otherwise, and nothing about a marriage, divorce, birth or death updates it automatically.
This is the item most likely to cause a painful outcome and the least likely to be raised by an employee. An annual instruction to open the record and confirm it takes one line and one link.
What to Check on Your Own Side
- Whether your enrollment system defaults to last year’s elections or forces an active choice
- Whether your match is communicated in dollars anywhere, or only as a percentage
- Whether your materials distinguish FSA from HSA clearly, including what happens at termination
- Whether beneficiary confirmation is prompted annually or only at hire
- Whether the qualifying life event list and deadline appear somewhere an employee can find in March
- Whether anything speaks to employees over 55, who face different HSA and Medicare decisions (see HSAs and employees nearing Medicare)
- For Maryland employers, whether your materials explain the FAMLI payroll deduction that starts in January 2027
Talk It Through With Us
Send us your current enrollment materials and we will tell you which of these five your employees are most likely to get wrong. We advise employers across Maryland, DC and Northern Virginia from our Gaithersburg office, and this is a quick, specific review. Get a real review of your current coverage.
Frequently Asked Questions
Should we force an active election rather than defaulting?
An active election increases engagement and reduces the number of employees carrying a plan that no longer fits them. It also increases questions during the window, which is a real operational cost. Most employers who switch find the tradeoff worth it, especially in a year with significant plan changes, but it should be a deliberate decision rather than a system default.
How do we get more employees to capture the full match?
State it in dollars at real salary levels rather than as a percentage, and put it where the contribution election is made rather than in a separate document.
What is the difference between an FSA and an HSA in practice?
An HSA belongs to the employee, rolls over indefinitely and travels with them when they leave. For 2027 the HSA limits are $4,500 self-only and $9,000 family. A health FSA generally does not roll over beyond any grace period or limited carryover your plan allows, and the balance is usually forfeited at termination.
How often should beneficiaries be confirmed?
Annually, as part of open enrollment, with a direct link to the record rather than a general reminder.
What counts as a qualifying life event?
Commonly marriage, divorce, birth or adoption, death of a dependent, a change in a spouse’s employment or coverage, and loss of other coverage. The exact list and notification window are set by your plan documents, so publish yours rather than a generic list.
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