Every fall, millions of employees spend about 15 minutes clicking through their benefits enrollment — picking the same health plan, skipping the fine print, and moving on with their day. That 15 minutes can quietly cost you thousands of dollars a year.
Open enrollment is one of the most overlooked financial planning opportunities available to working professionals. Your employer benefits package — health insurance, retirement accounts, tax-advantaged savings vehicles, insurance coverage — represents real compensation. And most people leave money on the table because they treat it like an administrative chore instead of a planning decision.
Here are the most common mistakes, updated for 2026 limits and the changes introduced by the One Big Beautiful Bill Act (OBBBA).
Mistake 1: Picking the Same Health Plan Every Year
Your health plan is probably the single most expensive benefit decision you make each year, and yet most people default to whatever they chose last time. Plans change. Premiums change. Your health needs change. What was the right plan two years ago may be costing you money today.
The fundamental choice usually comes down to a High Deductible Health Plan (HDHP) versus a traditional PPO or HMO. For 2026, the IRS defines an HDHP as having a minimum annual deductible of $1,700 for self-only coverage and $3,400 for family coverage, with maximum out-of-pocket costs of $8,500 and $17,000 respectively.
The HDHP typically has lower monthly premiums but higher out-of-pocket costs when you use care. The PPO has higher premiums but lower costs at the point of service. The math isn't as simple as comparing deductibles. You need to model the total annual cost under different utilization scenarios — premiums plus expected out-of-pocket expenses — for each plan option.
This gets more nuanced for dual-income households. If both spouses have employer-sponsored coverage, you should compare carrying separate self-only plans versus one family plan. In many cases, two individual HDHPs with their own HSAs end up being both cheaper and more tax-efficient than a single family plan — but not always. Run the numbers.
Mistake 2: Not Maximizing the HSA
If you enroll in an HDHP, you gain access to a Health Savings Account — and the HSA is arguably the most powerful tax-advantaged account in the entire tax code. Contributions are tax-deductible (or pre-tax through payroll), the money grows tax-free, and withdrawals for qualified medical expenses are tax-free. That's a triple tax advantage that no other account offers.
For 2026, the contribution limits are $4,400 for self-only coverage and $8,750 for family coverage. If you're 55 or older, you can contribute an additional $1,000 catch-up contribution. Most people use their HSA like a checking account — they put money in and spend it on current medical expenses. That's fine, but it misses the bigger opportunity.
The more powerful strategy is to max out your HSA, invest the balance for long-term growth, and pay current medical expenses out of pocket. There is no time limit on reimbursing yourself from an HSA. You can pay a medical bill today, save the receipt, and reimburse yourself from the HSA years or even decades later — letting the investments compound tax-free in the meantime. By retirement, your HSA can function as a supplemental retirement account with unmatched tax efficiency.
One notable change under the OBBBA: Direct Primary Care (DPC) arrangements are no longer disqualifying for HSA eligibility. DPC memberships — where you pay a monthly fee directly to a primary care physician for unlimited access — are now permitted alongside an HDHP, with a cap of $150 per month for individual coverage and $300 per month for family coverage. This is a meaningful development for people who want both concierge-style primary care and HSA access.
Mistake 3: Ignoring the Dependent Care FSA (DCFSA)
If you have children under 13 or dependents who require care while you work, the Dependent Care FSA is one of the most efficient ways to reduce your tax burden. The OBBBA increased the annual DCFSA limit to $7,500, up from the long-standing $5,000 cap. Contributions are pre-tax, which means they reduce both your income tax and your FICA taxes.
The catch: the DCFSA is a use-it-or-lose-it account. Any balance you don't spend on eligible dependent care expenses by the end of the plan year (or the grace period, if your employer offers one) is forfeited. So you need to estimate your child care costs carefully before electing a contribution amount.
There's also an interaction to be aware of between the DCFSA and the Child and Dependent Care Tax Credit. The OBBBA enhanced the credit to up to 50% of qualifying expenses — up to $3,000 for one qualifying individual or $6,000 for two or more. However, every dollar you run through the DCFSA reduces the expenses eligible for the credit. For most high-income households, the DCFSA still wins because the credit phases down at higher income levels, but it's worth modeling both options to see which combination produces the best result for your family.
Mistake 4: Overlooking the Health Care FSA and LPFSA
If you're on a traditional health plan (not an HDHP), you likely have access to a Health Care Flexible Spending Account. The 2026 contribution limit is $3,400, and your employer may offer a carryover provision of up to $680 into the following plan year. Like the DCFSA, unused funds beyond the carryover amount are forfeited.
What many people don't realize is that if you are enrolled in an HDHP with an HSA, you can still use a Limited Purpose FSA (LPFSA). The LPFSA covers dental and vision expenses only — not general medical expenses — and it does not disqualify you from contributing to your HSA. This means you can effectively stack two tax-advantaged accounts: the HSA for long-term medical savings and the LPFSA for current dental and vision costs.
If your family regularly spends money on orthodontics, glasses, contacts, or dental work, the LPFSA can save you a meaningful amount in taxes each year while preserving your HSA balance for investment.
Mistake 5: Defaulting on Life and Disability Insurance
Most employers offer basic group life insurance at no cost, typically one to two times your base salary. That's better than nothing, but for most families it's not nearly enough. If you're the primary earner in a household with a mortgage, children, or other dependents, you likely need coverage in the range of 10 to 20 times your income, depending on your specific obligations and financial goals.
Group disability insurance is often overlooked entirely. Many employer plans cover only 60% of your base salary, and the definition of “disability” may be restrictive. Bonuses, commissions, and other forms of variable compensation are typically excluded. And if your employer pays the premiums, the benefit is taxable to you when you receive it — meaning your actual income replacement could be closer to 40% of your total compensation after taxes.
Open enrollment is the time to evaluate whether your employer-provided coverage is adequate or whether you need supplemental individual policies. This is especially important for high earners, where the gap between group coverage and actual income replacement needs can be significant.
Mistake 6: Not Reviewing Retirement Account Elections
Open enrollment is also the natural time to review your retirement plan contributions, even though many plans allow changes at any time. For 2026, the 401(k) employee deferral limit is $24,500. If you're age 50 to 59 or 64 and older, you can add an additional $8,000 catch-up contribution. If you're age 60 to 63, the enhanced catch-up is $11,250.
One of the most important decisions is whether to contribute on a pre-tax (traditional) or Roth basis. Pre-tax contributions reduce your taxable income now but create taxable withdrawals in retirement. Roth contributions are made with after-tax dollars but grow and are withdrawn tax-free. The right choice depends on your current tax bracket, your expected tax bracket in retirement, and the flexibility you want in your withdrawal strategy later.
If your plan allows after-tax (non-Roth) contributions beyond the $24,500 employee deferral limit, you may be able to execute a mega backdoor Roth strategy. The total annual limit for all defined contribution plan contributions — employee deferrals, employer match, and after-tax contributions combined — is $72,000 in 2026 (not counting catch-ups). By making after-tax contributions up to this limit and then converting them to Roth (either in-plan or via rollover to a Roth IRA), you can dramatically accelerate your Roth savings. Not all plans permit this, so check with your HR department or plan administrator.
For employees who have access to both a 403(b) and a 457(b) plan — common in government and nonprofit settings — you can defer $24,500 into each plan for a combined $49,000 or more in employee deferrals alone. The 457(b) has no early withdrawal penalty, making it an especially flexible tool for those planning to retire before 59½.
Employee Benefits as a Financial Planning Tool
The thread connecting all of these “mistakes” is the same: most people treat their employee benefits as isolated decisions rather than as part of an integrated financial plan. Your health plan choice affects your HSA eligibility. Your HSA strategy affects your retirement plan priorities. Your retirement account elections affect your current tax bracket, which affects which Roth conversion strategies make sense.
When you look at benefits in isolation, you optimize for one thing and miss the bigger picture. When you look at them holistically — as part of your overall tax, savings, risk management, and retirement strategy — you find opportunities that most people never see.
If you're heading into open enrollment and want to make sure you're getting the most out of your benefits, this is the kind of exercise that a good financial planner can walk you through. Not to tell you which health plan to pick, but to help you understand how each decision fits into the larger plan for your financial life.