The Dependent Eligibility Audit Process
HMS has a customized dependent eligibility verification process that will identify ineligible dependents that are being covered by the employer’s health plan. Employers have experienced up to 12% reduction in health care participants by using this service, with a usual range of 4% to 8%. A reduction of ¼ to ½% of enrolled dependents, which is 1 out of every 200 to 400 enrolled dependents, will typically cover the costs of our program. Returns on investment generally range from 400% to over 1000%.
HMS’s dependent eligibility verification was built with flexibility in mind. The steps below outline a typical approach and represent the “Best Practice” method. Our clients have achieved greater than a 95% employee response and participation rate when following our recommended approach. However, virtually every step of the process can be customized to meet the unique needs and culture of each employer. The specific details of the entire process would be defined during the planning phase of the project and thoroughly documented.
Planning Phase
During the planning phase, most of the aspects of the project are defined and documented. These include, but are not limited to:
- Defining the project timeline
- Defining the required verification documents
- Customizing the outbound letter and FAQ documents
- Customizing the website content
- Define and test the enrollment data file
Prior to sending any outbound mail our mail fulfillment service will check all physical addresses electronically to ensure that they are deliverable. We will track all invalid mailing addresses and implement processes to make corrections to the address file and will communicate all results to the employer. Any mail that is returned as undeliverable is flagged as having an invalid address in our system. A report is then generated to return to the employer and research may be conducted with the employer’s collaboration to obtain accurate address information. If mail is returned with a forwarding address, that information is captured in our system and will be provided to the employer.
Notification Letter
Initially, an internal notification letter may be sent to inform employees with enrolled dependents that an audit will be taking place. The notification letter can be separate from or included with the amnesty phase described below.
Amnesty Phase (optional)
Some dependent audits include an Amnesty period to allow for the removal of ineligible dependents with no penalty to the employee. We recommend that the Amnesty Letter be employer branded or co-branded with HMS Employer Solutions, as this may be the initial introduction that the employees would have to HMS. The letter may also be printed on the client’s stationery if preferred. The Amnesty letter, like all communications throughout the process, can be based upon our templates, with or without the employer’s customizations, or upon a letter developed by the employer. The process is collaborative such that we can ensure that the employer’s objectives are met, that the proper tone is set for the project, and that the volume of employee concerns and questions is minimized. The letter will detail the audit’s objectives, clearly state the rules of eligibility and list the enrolled dependents by name and relationship. Included in the mailing package will be a return envelope and a double sided FAQ page to address common questions and concerns. The outbound mailing package would have the employer’s name and/or logo with an HMS return address. This will encourage a higher opening-rate for the mailing package, as well as enable HMS to handle all return mail. All outbound mail is sent first class.
At the end of the Amnesty Phase, HMS will supply the employer with a list of dependents to be removed from the Plan in a format specified by the employer or its enrollment vendor. This saves time for everyone and streamlines the process for all parties involved. We do not charge extra fees for data conversion or formatting.
Verification Phase
HMS will conduct a detailed review of enrolled dependents to confirm eligibility. This phase requires employees to submit documents verifying their dependent’s relationship, residency, dependency and child custody status. The specific documents to be required are at the discretion of the employer and will be based upon HMS’ recommendation and experience with prior audits, as well as the specific definition of an eligible dependent in the employer’s summary plan descriptions.
The employees’ responses will be returned to HMS. The response can be provided in either a courtesy or business reply envelope that is included in the mailing package, via fax or via secure document upload capability accessed through the custom employee web portal. Providing multiple ways for an employee to respond will increase the compliance rate with the audit.
For all employees who do not respond to the first or the second letter, a third and final letter is sometimes included which explains the consequences of a non-response and provides a final opportunity to comply. This letter will be sent approximately one week prior to the deadline for the verification period.
