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Dependent Eligibility Audits

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Newer Alternatives for Lowering Health Care Costs

Fully Insured and/or Self Funded Plans

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OBJECTIVE

To insure that employees who claim dependents on the employer-sponsored health plan are truly eligible dependents based on the definition of a dependent as outlined in the Plan Document

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Presentation Overview

The stages to a Dependent Eligibility Audit are:

1. Planning

2. Common Objections

3. Communication

4. Documentation

5. Data Accumulation

6. Results/Findings

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Presentation Overview (cont’d)

1. Planning• Audit Format• Overall Project Goals and Objectives• Timeline: ideal prior to open enrollment

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Presentation Overview (cont’d)

2. Common Objections• Trust issues from employees as this is a delicate

undertaking• Initial reaction to cost of the project• Sensitivity in a union environment

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Presentation Overview (cont’d)

3. Communication is KEY• Amnesty Phase – no disciplinary action• Structure of communication to fit corporate culture• Additional phases as applicable

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Presentation Overview (cont’d)

4. Documentation Gathering & Authentification • Burden is on the employee to prove that a covered

dependent is actually entitled to coverage

- That usually means providing documentation such as copies of marriage certificates, birth certificates, adoption agreements, income tax returns and letters from colleges.

• Type of documentation, FAQ’s, examples• Onsite authentication vs. documents mailed, faxed, or e-

mailed

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Presentation Overview (cont’d)

5. Data Accumulation• Call Center or an experienced live team available to

answer employee questions regarding the audit, acceptable documents, etc.

• Tabulate responses from employees’ and maintain in a database

• Analyze responses and provide summary of findings

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Presentation Overview (cont’d)

6. Results • Cost benefits to employer

– Reduce health care costs– Lower future administrative costs– Lower Premiums– Lower cost for employee share with savings

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Business Impact

• ERISA Fiduciary Compliance• Return on Investment• Without a process in place to protect an employer’s

health plans, covering ineligible dependents will continue to put the organization at risk

• Employees who cover ineligible dependents not only increase the cost for the employer and fellow employees, but also contribute to eroding an organization’s ethical standards.

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Business Impact (cont’d)

Options for measuring ROI• Calculate future reinsurance premiums and/or

administrative costs on a go-forward basis• Calculate actual or expected claims paid for ineligible

dependents• Seek restitution from employees for ineligible

dependent(s)’ claims previously paid, or for premiums and administrative fees

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Business Impact (cont’d)

ERISA Fiduciary Compliance

• Plan sponsors have a fiduciary responsibility to minimize risk to the health plans

• Plan sponsors’ failure to protect the health plans from exposure caused by covering ineligible dependents is a violation of the fiduciary responsibility as defined by ERISA.

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QUESTIONS & ANSWERS

For more information, call:

Phyllis Hoff

(314) 692-5887