Simple Open Enrollment Tips That Can Make a Big Difference

When it come to open enrollment, employees often experience the same feeling: trepidation.

More than half of Americans eligible for workplace benefits through their employer reported regretting their choices during the prior year’s open enrollment period, according to a 2024 survey from financial service organization Equitable. However, 53% rely on the materials or information sessions provided during open enrollment to make decisions. 

Here are some tips that will help you ensure employees don’t end up making the wrong choices:

What Not to Do

Three bad HR practices undermine employee success during open enrollment:

• Neglecting to share vital information from employees. This might happen when, say, you send out benefits materials but don’t include monthly costs. Employees need transparency about why and how benefits might be changing each year.        
• Cramming every benefit into one piece of communication. Some companies hand out pages and pages of text, jamming a year’s worth of communications into a few weeks, and figure they have done what they need to do. What they have achieved, however, is confusing their employees. 
• Giving employees too little time to process their open enrollment choices. While many people wait until the last day to fill out the health care selection forms, they may have been considering their options with family members for weeks. Therefore, giving them just a few days to make decisions is not going to be enough.

How-To Guide: AI Prompts for Crafting Employee Communications

What to Do Instead

Following best practices will lead to better outcomes for employees:

• Be transparent about why benefits are changing. Break down the details and do the work for the employees. Provide scenarios so employees can better understand their options and cost breakdowns for different life situations.
• Communicate the technical details of your various benefits over time. Don’t assume employees will weed through all your materials to make sense of the benefits offered to them.
• Make full use of visual aids. Photos, icons, infographics, memes, charts, graphics — they all help to attract, and more importantly hold, people’s attention. When you increase visual representation of what you are communicating, your people are more likely to engage, learn, understand, and ultimately take action.
• Build in enough time. It might be a minimum of three weeks, but there are arguments for extending the period even longer. 

Pretax vs. Post-Tax Premium Payment Options

Employees may have a choice between making pretax or post-tax premium payments to vision and dental coverage plans (and, less often, to health coverage plans), but it’s vital that they understand this choice.

Most employees select pretax dollar contributions to pay plan premiums. But to help taxpayers cope with hefty out-of-pocket medical bills, the IRS allows taxpayers to deduct unreimbursed health expenses — including dental and vision costs — if these amount to at least 7.5% of an employee’s adjusted gross income (AGI) for a given tax year.

Per the IRS, “If you itemize your deductions for a taxable year on Schedule A (Form 1040), Itemized Deductions, you may be able to deduct the medical and dental expenses you paid for yourself, your spouse, and your dependents during the taxable year to the extent these expenses exceed 7.5% of your adjusted gross income for the year. The deduction applies only to expenses not compensated by insurance or otherwise regardless of whether you receive the reimbursement directly or payment is made on your behalf to the doctor, hospital, or other medical provider.”

If your itemized deductions add up to less than the standard deduction, you will benefit more from a pretax health care plan.

Employees’ choice for pretax and post-tax coverage will depend on their total tax picture as well as their anticipated health, dental, and vision expenses. They may want to speak with a tax advisor if they anticipate significant costs that won’t be reimbursed through their coverage.

What to Tell Employees

Open enrollment is often time-consuming and confusing for employees, but these choices can make a huge financial impact. Share the following advice with employees to help prepare them for the upcoming enrollment season:

• Take your time. Read through the enrollment materials you receive thoroughly. If you are invited to a face-to-face meeting, make time to attend. It’s possible you’ll be offered different plan options and coverages this year. The better you understand the changes, the better decisions you’ll make.
  
• Take a trip down memory lane. Think back to what happened in your life this year. How often did you and your family members need medical services? What kind? Are any treatments ongoing? Consider any life changes that could affect the benefits you need, such as a marriage, divorce, a child going off to college, or a spouse changing jobs.
  
• Look ahead. Consider what the next year will look like for you and your family. Are you planning to have a baby? Knee replacement surgery? A root canal? Does someone need braces? New glasses? Keep this in mind as you look at your coverage options.
  
• Dive into the details. Note whether the plans’ provider networks have changed to make sure your doctors are still in-network. Is your chiropractor also covered? Does the plan cover orthodontics? Is your spouse’s daily prescription drug covered, and did the coverage change? Consider areas of need such as access to specialists, mental health care, therapies, complementary and alternative medicine, and chronic care. Look at the options offered in all plans, including health, dental, vision, and disability.
  
• Get out your calculator. Add up the amount you’ll need to pay toward your health premium plus deductibles, co-payments (flat-dollar amounts) for prescriptions and doctor office visits, and co-insurance (a percentage of the cost you’ll pay) for services. Understand what you’ll be asked to pay if you seek care outside your network. This will give you a clearer picture of how much you’re likely to spend. The plan that looks to be the cheapest option may not really be the cheapest for you.
  
• Determine an acceptable level of risk. Consider your comfort level with risk. If you want your family to be covered for every eventuality, a more traditional plan might be right for you. If you’re comfortable taking on some upfront costs, a high-deductible plan with a lower premium might be your plan of choice.
  
• Take advantage of extras. Your employer may offer the option to reduce your health premiums in exchange for your participation in a wellness program or health risk assessment. It may match some or all of the money you save in your 401(k) plan or let you set aside tax-deferred money into a health savings account or flexible spending account. Check with your employer to see if it offers voluntary insurance with a group discount and payroll deduction for premiums such as critical illness, pet, auto, and homeowners coverage. 
  
• Ask questions. Don’t be shy about asking your HR or benefits department to explain something if you’re not sure. They’re there to help and want you to make the best decisions for your situation.