Help employees think about the process as an annual financial check-up with these 3 steps.
Many employees still think of open enrollment as an annoying multi-choice chore—a required task they put off for as long as they can, then complete as quickly as possible. This is unfortunate because, in truth, open enrollment is something far more positive and helpful—the perfect opportunity for your employees to save themselves money with smarter benefits decisions. Or put another way: a built-in annual financial check-up.
Most financial-wellness programs focus on helping employees make better choices about post-paycheck activities like creating—and sticking to—a budget. The challenge with these initiatives, however, is that the advice tends to be general and lacks urgency—and success is nearly impossible to measure.
This is why employers who focus on offering advice about what employees should do with their pre-paycheck earnings—i.e. their pre-tax gross pay—have a much better chance of driving dramatic, quantifiable results.
What do I mean? Well, when employees make the choice to automatically direct money into a 401(k) or an HSA every few weeks, they end up saving hundreds, if not thousands, of dollars on taxes by barely lifting a finger. And when employers make their open-enrollment period the annual trigger for preaching the virtues of these pre-paycheck benefits decisions, not only do their employees take action (by the enrollment deadline, too), those employers save their companies money by reducing their payroll taxes as well.
Here are three messages you can use to help your employees see open enrollment as their annual financial check-up:
- Open enrollment is when they can make sure next year’s benefits will match next year’s needs.
A lot can change in a year—maybe an employee is planning surgery, or planning to have a baby, or just planning to stay real chill for a dozen months or so. The point is, the medical plan they chose last year might not be the best financial option for next year.
Ideally, your employees have access to a decision-support tool to help walk them through the costs and benefits of each of their options, based on the care they anticipate needing. But at the very least, thoughtful messaging can remind them to consider how their big life changes might affect their benefits and offer some guidance about the questions they should be asking.
- Open enrollment is when they can tinker with their pre-paycheck decisions—and save real money.
Your employees are far more likely to know their monthly mortgage payment or cable bill by heart than the insurance premiums, federal and state taxes, or tax-savings-account contributions automatically taken from their paychecks.
That’s because most people make all their tax-savings-related decisions once a year during OE, and then totally forget about them until next year. This makes it particularly important for employers to help their employees make the smartest possible tax-savings choices when OE rolls around.
If companies clearly communicate the financial upside of enrolling in—and/or contributing to—their benefits, employees are more likely to make decisions that will ensure they end up in a more financially well place all year long.
- Open enrollment is when your employees can take stock of all their financial goals and obligations, benefits-related or otherwise.
If you really want this financial check-up to feel meaningful and personally relevant to employees, offer resources that will help them weigh their benefits-related financial options with all the other factors they might be dealing with—student loans, credit-card debt or saving up for a house, to name just a few.
Share a variety of common employee financial scenarios along with some general advice on which problems to tackle first. For example, you might advise employees to first create an emergency fund so they don’t have to use credit to deal with surprise bills, then take advantage of their company’s 401(k) match (which yields immediate 100% return), followed by paying off credit-card debt. Also consider providing fiscal-responsibility resources, like personal-finance podcasts or savings-building apps, to help them follow through.
Undoubtedly, rebranding open enrollment as a financial check-up will take a little elbow grease, and a leap of faith. But the significant money your employees—and your company—could save as a result makes it a bold move worth giving a shot.
Bob Armour is CMO at Jellyvision, makers of interactive benefits counselor ALEX.