Many employers have found that Dependent Eligibility Audits can dramatically reduce their healthcare costs. When employers moved to self-service enrollment systems, many no longer required supporting documentation for enrolling dependents. Most included some form of attestation during the enrollment process where the employee would acknowledge that they had reviewed the eligibility rules and affirmed that their dependents were eligible.
Unfortunately for employers, covering and paying for the health benefits of individuals who are not eligible is more common than expected. We typically find that roughly 4% to 8% of the dependents on any plan are ineligible for coverage after a thorough and comprehensive Dependent Eligibility Audit.
During the last few years employers have been facing unprecedented financial challenges. Healthcare costs have continued to rise and the economy has wreaked havoc on the financial strength of many employers. In addition to the financial struggles that face employers today, employers are also required to be more vigilant than ever about compliance. ERISA and Sarbanes- Oxley both have provisions that demand higher levels of controls over healthcare spending and reduction of risk.
With Healthcare Reform and other such provisions, it is very important for employers make sure every dependent they are covering is actually eligible for coverage. The shift towards mandating that employers provide dependent coverage later into a young adult’s life (up to age 26) will result in higher costs for employers.