HMS Healthcare October 9, 2012

Imagine you’ve just completed a Dependent Eligibility Audit and have received the results from your audit vendor. The data will likely include the following categories of potential ineligible dependents:

Voluntary Terminations – employees who now understand their dependent(s) aren’t eligible and should be removed from the plan
Partial Responders - employees who submitted only a portion of the requested documentation, or submitted documentation that was not considered valid, and
Non-Responders – employees who did not submit information verifying dependent eligibility.

What is the recommended approach for acting on this information?

First, an audit is only as good as the follow-up conducted after it’s been completed. Failure to hold your employees accountable could lead to future audits or noncompliance. So we suggest that you notify employees whose dependents will be terminated in a future payroll cycle as soon as you’ve received the information from your vendor. We have found that approximately 6% of employees tend to be partial or non-responders. Of this 6%, only 1.5% is added back on the employer’s plan within 60 days of the audit. This low rate of appeals suggests that, for the most part, partial and non-responders often realize that their dependents are ineligible during the course of the audit and choose not to participate.

Second, once the terminations are complete, be prepared for appeals and requests for reinstatement from employees and their dependents. Most vendors performing the audit do not continue providing services to assist with appeals. However, some vendors may provide additional guidance and support to employees and terminated dependents at the end of an audit as an optional service. If you would like assistance during the appeals process, check with your audit vendor to confirm that this service is available. Once the reinstatement period is over, the employer will receive a file containing information from the employees/dependents who responded.

Lastly, you should work with a vendor that will continue to communicate with employees or dependents who submit documentation after the audit is closed. As an example, HMS sends a postcard to late responders to notify them that the documents will not be acted upon and that they should contact their Human Resources department for further guidance. If your vendor does not communicate with these individuals, they may assume that their submitted documents are being considered.