PremierSource

Meet the insurance audit. Increasing numbers of employers are requesting personal documents to ensure that all the dependents in their health care plans are entitled to coverage.

With insurance costs rising faster than inflation for a decade, they want to verify that you’re actually married to the person receiving spousal benefits, or that your 19-year-old son really is enrolled as a full-time student. If you can’t produce proof, the dependent loses coverage.

“There has been a significant growth of interest in conducting these types of reviews,” said Daniel Priga, a Pittsburgh-based principal for the Mercer workplace consulting firm, where the workload conducting audits has doubled in each of the past two years. “This is a hot one.”

“The high turnover industries are the most likely to do them: service, retail, banking,” adds Susan Johnson, a senior consultant with Watson Wyatt Worldwide in Chicago. “Everybody’s at least talking about them. It’s grown exponentially in the last 18 months.” (Read full article here.)

It is a little-known statistic that more than 10% of employees on average enroll ineligible dependents on their health plans.  Coverage for ineligible dependents can cost your company 5% or more of your total health plan expenditures (10% is common but our dependent eligibility audit teams have seen as high as 15%).  High costs limit an organization's ability to offer the most attractive benefits possible.  Employers also need to be aware of the potential corporate and personal risks involved with fiduciary irresponsibility in relation to ineligible dependent abuse.  This fiduciary responsibility is outlined in the Exclusive Benefit Rule for Fiduciaries under ERISA.
 
PremierSource has developed resources to assist employers in this arena and meet them where they are at in the process of identifying their dependent eligiblity abuse.  It is important for employers to be aware of the national benchmarks for dependents -- currently, the average dependent per employee is 1.6.  If your plan's average dependents per employee is significantly higher than this, you may want to dig a little deeper to determine whether or not your plan is being abused or is at risk for abuse.  For some employers, it may be enough to implement basic dependent eligibility verification safeguards to help mitigate potential abuse.  Others may need to take the next steps toward implementing a random audit.  Employers who have experienced great abuse on their plans or who suspect abuse on their plans may need a more comprehensive audit.  PremierSource offers turnkey solutions at every level to help meet employers where they are at in reducing the risk of potential abuse on their plans.
 
If you suspect dependent abuse on your plan, please call now for a complimentary preliminary evaluation of your program.