It's that time of year again. Open enrollment offers employees the opportunity to do some research about their benefit plans, make smart choices, and then save hundreds of dollars — or more — in 2020.
Unfortunately, the vast majority of employees fail to review their insurance benefits at the end of the year. As a result, they choose the same benefits instead of taking time to consider making any changes. This is easily one of the biggest — and costliest — mistakes people make during open enrollment.
According to a 2018 report from Aflac, 93% of employees simply stick with the same benefits year after year. In fact, 40% of the 2,000 survey respondents said they would rather do "three hours of hot yoga" or "clean up dog poop" than research their insurance benefits.
If you aren't setting aside time to review your plans, you risk facing serious consequences later on. Going on autopilot comes with a hefty price tag, and here's why:
1. You might be paying too much for health care.
The right health plan is the one that gives you the best care for the least amount of money — and it may change often depending on your personal situation (e.g., if you plan to have a baby next year or only went to the doctor once this year, but have medical procedures scheduled throughout the next few months).
Doing your research and making the smartest choices can save you hundreds — possibly thousands — every year. According to recent data from Jellyvision, a service that helps employees make smart decisions about their benefits and finances, the average cost difference between an employee's most cost-effective plan and second most-cost-effective plan last year was $642.
2. You might be leaving "free money" on the table.
Many companies will match whatever an employees contributes to their retirement account, up to a certain percentage. (The average employer 401(k) match reached a record high of 4.7% this year, according to Fidelity.) If your employer offers a 401(k) match, and you're not saving enough to get all those matching dollars, you're basically turning down free money.
While you can adjust your contribution amount any day of the year, open enrollment is the perfect time to do so. Remember, every dollar you put toward the match is earning you an immediate 100% return on your investment — and a 401(k) is a pre-tax account, so you'll pay less in taxes, too.
3. You might be overlooking other important benefits.
We tend to think of benefits in narrow terms: Medical, dental, vision, retirement — and not much else.
But your employer may offer other benefits that you never even knew existed, like insurance for your pet's vet bills, life insurance or a "hospital indemnity" plan that provides a cash payout when you're hospitalized (you can even use this money to cover medical bills or pay your rent.
You can buy most of this stuff on your own, and many people do, but if you buy it through your employer, you'll usually pay a lot less.
Open enrollment action plan
Let's be honest: Benefits are confusing. Confusion leads to stress, stress leads to avoidance, and avoidance leads to making the same expensive mistakes every year.
Don't hesitate to take advantage of any tools or services your company offers that can help you compare the overall costs of different plans.
If you don't have access to something like that, here are some tips on how to make the most out of open enrollment:
1. Set aside at least a half hour.
About 56% of employees spend less than 30 minutes researching their benefits, while 19% don't do any research at all, according to the Aflac report.
At the end of the day, it's really just a matter of adjusting your priorities. Spending 30 minutes on Instagram may be fun, but it won't help your financial situation. By using that time to dig into your benefits, you can put yourself ahead of the curve and save a lot of money.
2. Don't be intimidated by the terminology.
Deductible! Co-insurance! Out-of-pocket maximum! PPO! HDHP! DCFSA! If you're confused by any of these words, you're not alone.
As you go through your benefits, it's helpful to keep a terminology reference within reach. Your benefits team may also have an easy-to-understand list of common terms. If not, try this glossary. Or your uncle Google.
3. Don't copy your co-workers.
Yes, Jessie in IT really seems to have it together. But the plans and contribution amounts that Jessie chose for her family of four might not be right for you and your Golden Retriever.
Don't follow the crowd. Focus on finding the plan that's best for you.
4. Schedule at least 15 minutes with someone on your benefits team.
As you go through your benefits, you'll have a lot of questions. The best way to get answers is to get on the calendar of someone on your benefits team.
Remember, they're your best internal resource — and it's their job to help you. And if they don't have all the answers, they can still point you in the right direction.
Amanda Lannert is an expert on employee benefits and the CEO of Jellyvision, a service that helps employees make smart choices about their pay, benefits and savings — with transparent and unbiased guidance. She was named CEO of the Year at the Moxie Awards in 2014 and 2015, and has been profiled in the Chicago Tribune and Crain's.
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