🇺🇸United States

Confusing Open Enrollment Experience Driving Dissatisfaction and Turnover Risk

3 verified sources

Definition

Employees frequently find the benefits and open enrollment process confusing, leading to poor plan choices, under‑utilization of benefits, and frustration with HR. This degrades the perceived value of total compensation and can harm retention.

Key Findings

  • Financial Impact: SHRM data cited by Obsidian HR shows 41% of employees find open enrollment extremely confusing; if even a small fraction of these disengaged employees leave, replacement costs (often 20–30% of salary) can easily exceed $100,000 per year for a mid‑size firm.
  • Frequency: Annually (with ongoing service issues during the year)
  • Root Cause: Complex health and benefits options; insufficient or ineffective employee communication; limited decision support tools; and HR time diverted from education to manual processing.

Why This Matters

This pain point represents a significant opportunity for B2B solutions targeting Human Resources Services.

Affected Stakeholders

Employees and their dependents, HR Business Partners, Benefits Communication/Total Rewards

Deep Analysis (Premium)

Financial Impact

For a mid-size client with 300–500 employees, even losing 3–5 frustrated employees per year at an average $80,000 salary and 25% replacement cost means $60,000–$100,000+ annually in turnover alone, plus tens of thousands in avoidable healthcare spend from misuse or underuse of preventive and in-network care.

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Current Workarounds

Background Check Coordinators and HR staff field ad-hoc questions via email and phone, maintain personal Excel cheat sheets and FAQ docs, and manually walk confused employees through elections instead of using a guided digital decision experience.

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Employer Paying Premiums for Ineligible or Terminated Employees

Assuming $600/month average medical premium and 3–10 ineligible lives carried on the bill at any time, recurring loss is roughly $1,800–$6,000 per month ($21,600–$72,000 per year) for a mid‑size employer.

Missed Employee Contributions Due to Payroll Deduction Errors

For a 500‑employee firm with 2–5 missed or under‑deducted cases per month at $150–$300/month each, recurring leakage is in the range of $300–$1,500 per month ($3,600–$18,000 per year).

High Internal Labor and Overhead for In‑House Benefits Administration

Navia cites average HR employee cost of about $75,000 plus taxes, benefits, and overhead for benefits administration staff; a 1–2 FTE allocation implies $75,000–$200,000 per year in recurring internal admin cost for a typical organization.

Manual Benefits Billing Audits and Corrections Consuming HR Capacity

For a benefits team spending 10–20 hours per month on manual bill audits at a fully‑loaded HR cost of ~$50/hour, the recurring labor cost is $500–$1,000 per month ($6,000–$12,000 per year), excluding the opportunity cost of diverted strategic work.

Errors in Enrollment and Eligibility Causing Rework and Employee Remediation

If HR spends 0.5–1 hour resolving each of 10–20 enrollment errors per month at ~$50/hour fully loaded, rework labor runs $250–$1,000 per month ($3,000–$12,000 per year), not counting potential claim disputes or goodwill concessions.

Delayed Collection of Employee Premium Contributions

For a 500‑employee group with 5–10 cases per month of 1–2 missed pay periods at ~$150/period in contributions, delayed or at‑risk cash is ~$750–$3,000 per month ($9,000–$36,000 per year).

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