- What's at Stake: Rising employee dissatisfaction and misallocated spend could increase organizational healthcare costs.
- Supporting Data: Employees spend 30–60 minutes choosing benefits; over half later regret choices.
- Forward Look: Prepare for AI-enabled benefits navigation and proactive education to reduce enrollment errors.
- Source: Bullets generated by AI with editorial review
The standard open enrollment period lasts three months on average, leaving lots of room for employees to make very big, very costly mistakes.
The average employee spends only 30 to 60 minutes selecting their benefits during open enrollment, according to a 2024 study from financial service firm Equitable. As a result, more than half of employees regret their benefit choices. Awareness and quick intervention by benefit leaders can prevent mistakes and help them find the right solution.
"If employees don't understand their benefits, they're not going to use them," says Guy Benjamin, CEO of AI benefit platform Healthee. "And as an HR leader or benefit leader, why are you then investing time and effort to make sure you have the best benefit package if you're not making that benefit package accessible to employees?"
Read more: Preparing for open enrollment: Advisers face significant headwinds in Q4
Twenty-five percent of employees who regretted their decisions said they failed to adjust their benefits to match their lifestyle changes, according to Equitable, 20% forgot to make changes to their benefit selections by the deadline and 19% did not understand the options available or the benefits they selected. While it may not be realistic for benefit leaders to keep employees from avoiding every pitfall, there are two major mistakes employees tend to gravitate towards that could be avoided.
Mistake #1: Defaulting to last year's plan
During open enrollment, employees have the chance to revisit their benefit plan and make any changes or additions regarding their medical, dental and vision insurance coverage, as well as potentially exploring other options such as tax-advantaged savings accounts, HSAs or flexible spending accounts. Yet, roughly 90% of Americans choose the health plan they had the previous year, according to findings from benefits platform Lively.
"People change and their needs change, Benjamin says. "Employees will age, they will have kids and have older parents they need to take care of. Opting to just stay in one plan is not a best practice."
Read more: Strategic tips on making open enrollment work
For leaders, this often means higher costs for lower employee satisfaction, as well as less alignment between benefits and workforce needs. It also means that employees are often sacrificing any new or supplemental benefits organizations could have added in between enrollment periods that could help them save in other areas of their life such as childcare reimbursement, fertility treatments and student loan repayment programs.
Mistake #2: Paying for more coverage than they actually need
On top of simply choosing to remain in the same plan, there's also a tendency among employees to believe that paying the most for benefits automatically means they are receiving the most amount of coverage. But that's not necessarily true, Benjamin says. In fact, more than 60% of American employees are considered overinsured for their health benefits, according to data from KFF, meaning that they are enrolled in plans that are more robust than their actual needs, forcing them to pay higher premiums for coverage they are unlikely to use.
That statistic is compounded by the fact that employees aren't even spending enough to access the benefits of expensive plans. For example, more than half of workers in high-deductible plans reported not having the funds to cover their deductible, meaning that they are bearing the bulk of their healthcare needs on their own. That may not seem like it's costing organizations directly, but should employees start to delay or avoid care due to cost concerns it could lead to potential downstream health risks and higher long-term claims.
"Sometimes the most expensive plan actually doesn't cover the things they're looking for," Benjamin says. "For example, is it covering the doctors they want to see? Is the plan going to provide the best value for their money? Employees need to know how to dig deep into that plan and understand what their needs
are now."
Read more: How benefit managers can navigate open enrollment amid OBBBA
Solution: Using different tools to keep employees on track
Investing in better, more robust benefit education is the key component to avoiding most open enrollment missteps, Benjamin says, and that could look different for every organization. Tech tools such as AI chatbots are helping benefit leaders take big strides towards supporting themselves and their workforce. Healthee has its own AI chatbot, Zoey, that can answer employee questions ranging from complex situational changes and how they apply to their enrollment to simply explaining common benefit terms and services. Benefit leaders need only to integrate Healthee with their system.
If organizations aren't interested in an AI approach, they can invest in a number of educational resources that employees can rely on while they go through the enrollment process. If they have the bandwidth, they can try a more hands-on approach with employees and be more intentional with the time they have during scheduled meetings or one-on-ones.
"Open enrollment doesn't have to be a nightmare," Benjamin says. "[Done correctly,] creating ways for employees to understand their benefits doesn't just make them healthier and happier, it encourages them to stay with you longer."
