Is everyone that is currently enrolled in your company’s group health plan actually eligible to receive benefits?
Are you sure about that?
Research shows that 4%-8% of company health plan participants, on average, are actually ineligible to receive benefits. That’s a lot of money!
This is exactly why you need a dependent verification audit. This simple and effective process takes a fine-toothed comb through each of your group health plan’s dependents and verifies eligibility through a meticulous audit. Completing audits every few years will ensure you are compliant with ERISA and Sarbanes Oxley regulations and that you are controlling health care costs, enabling you to save money and reinvest elsewhere.
The word “audit” might sound unnerving; but, don’t fret – the process is actually very straightforward and only takes a few weeks to complete. We’ve got the rundown on the top reasons to stop waiting and schedule your dependent verification audit today!
1.) Quick to Set Up
Completing a dependent verification audit is a fairly simple exercise. The entire audit and verification process only takes 12 weeks (on average) from start to finish.
Dependent Verification Process:
- Weeks 1-2 → Planning
- Weeks 3-10 → Audits
- Weeks 11-12 → Appeals
During the first two weeks, we will work closely with your team to get to know your organization’s unique dynamic and challenges. Next, we will spend ~8 weeks communicating with your employees and actually auditing your company’s dependents. This process requires working one-on-one with your health plan enrollees to collect the proper documents to verify their dependents, which might include marriage certificates, birth certificates, court papers, etc. Finally, we allow ~2 weeks for any audit appeals and plan cancellations.
It’s that easy!
2.) Easy to Conduct
Dependent verification audits are easy to conduct. The process simply entails looking at each of the dependents currently enrolled in your company’s group health plan and collecting the appropriate items to verify that each dependent is eligible to receive coverage. There are several types of audits to consider when making a decision.
Dependent verification audits:
- Full Audit: captures documentation on all dependents
- Affidavit-Style Audit: requires just a signature from employees
- Targeted Audit: only audits a specific group of employees
- Mixed Audit: full documentation needed for some employees, affidavit needed for others.
Though there are certainly use cases for each type of audit, full audits yield the best results! A full audit is consistent among employees and requires employees to actively read and engage with communications.
3.) Easy to Outsource
Today’s human resources departments are lean, mean, people managing machines. Adding yet another task to an already full plate can seem daunting. This is where outsourcing comes in handy. Outsourcing takes the pressure off HR and allows your team to focus on their core job functions, like recruitment, employee engagement, and benefits management.
Four benefits of outsourcing dependent verification:
- Let someone else handle the communications and follow-up
- Ensures objectivity
- Eases communication to employees
- Reduces risk of objections from unions and other groups
Do employees have questions? No problem, your dependent verification account manager will be happy to help. Don’t have time to collect and verify documents? Of course, you don’t, that’s why you outsourced! We’ve got you covered.
4.) Makes HR a Hero
Let’s face it – HR is not always considered the “favorite” or “fun” department. However, the cost savings that come with a dependent verification audit will definitely shine a light on human resources and remind everyone the value that HR brings to the table.
The first step to heroedom is to get buy-in from appropriate parties for the dependent verification audit.
Keys to positioning an audit internally:
- Be prepared to overcome objections
- Consider amnesty for removed dependents
- Involve all levels of management, union reps, etc.
- Develop a detailed timeline of the process – the best time to conduct an audit is outside the open enrollment period
- Communicate, communicate, communicate
Then, you’ll need to efficiently and effectively communicate the dependent eligibility verification process to impacted employees.
- Use multiple communication channels: email, snail mail, posters, video, carrier pigeons, etc.
- Include calls-to-action and deadlines in all communications
- Keep emails shorts and sweet and make then scannable
- Use attention-grabbing subject lines
5.) Furthers Compliance
Though the cost control aspect of dependent verification often steals the spotlight, it’s important to remember that compliance is a crucial element of HR administration. It is considered a direct ERISA violation if a self-funded medical plan uses employee contributions to fund the claim payment of ineligible dependents. Furthermore, Sarbanes Oxley requires stringent fiduciary oversight of publically-traded companies, including the administration of benefits spending. By auditing your current health plan dependents, you will be ensuring that your company remains compliant with federal health care regulations, protecting your company from expensive fines and potential litigation.
6.) Reduces Stop-Loss Exposure
For self-insured businesses, stop-loss insurance can be a valuable tool to stop the financial bleeding during expensive health emergencies. However, if ineligible dependents are identified during a stop-loss claim, it can be a devastatingly expensive mistake for your company. In many cases, the insurance carrier may refute the claim, sticking either your company or your employee with the full cost of health care.
7.) Generates Sizable Savings
Perhaps the most obvious reason to complete a dependent verification audit is the cost savings. Providing benefits to dependents that are not eligible costs your company valuable money that could be used elsewhere.
8.) Allows Employers to Verify Surcharges
It is becoming more and more common for organizations to apply surcharges for specific events in order to further control health care costs. For example, your organization might apply a spousal surcharge to eligible dependents who can receive coverage elsewhere. However, companies have no real way of verifying this information, outside of a dependent verification audit.
There are two ways to approach this situation. The first is with a surcharge specific audit, which would verify specific information on dependents, like current employment and coverage options. The second option is to survey your staff to gather information like how many spouses are currently enrolled in your company’s group health plan and what the impact would be if a spousal surcharge were implemented.
9.) Easy to Integrate
A dependent verification audit can be a one-time event or an ongoing process. We recommend completing a single audit, analyzing the results, and having internal conversations to discuss the best course of action moving forward. The good news is that integrating dependent verification audits into your regular HR maintenance schedule can be quite easy with advanced planning.
A few post-audit questions to consider:
- Would ongoing audits moving forward be beneficial?
- How often should future audits occur?
- Should we handle these audits internally or outsource efforts?
We typically recommend completing a full dependent eligibility audit every 3-5 years, though the cadence might vary based on your specific needs.
10.) Funds Other Strategic Initiatives
So, you’ve managed to uncover substantial savings through your dependent verification audit – great! Now what?
How often do you have a great idea only to face the dreaded answer, “it’s simply not in the budget”?
Well, guess what – now it is.
A few ways to apply savings:
- Maintain medical plan contributions
- Fund an FMLA administration service
- Purchase more support for your ben admin
- Add executive benefits
- Create a year-round employee communication strategy
- Investigate employee engagement software platforms
These are just a few ways to apply dependent verification savings in a meaningful way, though we’re sure you can think of plenty others.
How would you use the money saved by eliminating ineligible dependents?