What Your Employees Get Wrong at Open Enrollment

Navigating Open Enrollment: Tips for Employees to Maximize Benefits

Most open enrollment advice is about process: start earlier, shorten the presentation, build a hub. That matters, and we have written about it separately.

This is the other half. Whatever your process looks like, employees make the same handful of decisions badly every year, and the same handful of questions arrive at HR every January. The pattern is consistent enough to design around, which means your materials can pre-empt most of it.

Key takeaways for employers

Passive rollover is the single most common mistake. If your system defaults employees into last year elections, most will take the default even when the plan changed underneath them.
Employees who do not contribute enough to capture the full retirement match are leaving compensation you already budgeted on the table.
The FSA and HSA distinction is the most frequently misunderstood item in a benefits program, and the consequences differ sharply.
Stale beneficiary designations are the quietest failure in the whole package and the hardest to fix after the fact.
Most employees do not know which life events allow a mid-year change, so they either miss the window or ask for changes you cannot make.

The five decisions employees get wrong

What happens	Why it happens	What to put in your materials
Rolling over last year elections without looking	The system defaults to it and nothing forces a review	A short, specific list of what changed this year: premiums, networks, formulary, deductibles. Not a note that says please review.
Contributing below the full retirement match	The match formula is stated once, in percentage terms, in a document nobody opens	The match expressed 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. Marriages, divorces and births do not update it automatically.
Missing a qualifying life event window	Nobody knows the list or the deadline until they need it	The list of qualifying events and the number of days they have. Thirty is common, but use yours.

Where the money actually leaks

Two of these 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 simply is not spent, and the employee is unaware 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 FSA thinking it behaves like an HSA can forfeit the remainder at year end. That is a real loss, it feels like the company took their money, and it is entirely preventable with one comparison table.

The beneficiary problem is worth its own reminder

Group life and retirement accounts pass by beneficiary designation, not by will. A designation naming a former spouse controls even when the will says otherwise. Nothing in a marriage, divorce, birth or death updates it automatically.

This is the item most likely to cause a genuinely painful outcome and the least likely to be raised by an employee, because nobody thinks about it. 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 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 anywhere an employee can find in March
Whether anything in your materials is aimed specifically at employees over 55, who face different decisions

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 suits them. It also increases the volume of questions during the window, which is a real operational cost. Most employers who switch find the tradeoff worth it, 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. Percentage framing consistently underperforms.

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. A standard 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. The distinction changes how much an employee should elect.

How often should beneficiaries be confirmed?

Annually, as part of 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 employment or coverage, and loss of other coverage. The exact list and the notification window are set by your plan documents, so publish yours rather than a generic list.

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 with what you have. We advise employers across Maryland, DC and Northern Virginia, and this is a quick, specific review.

Get a real review of your current coverage