Benefits of Dependent Verification

Beyond ballooning benefit costs, failing to regularly verify dependents also creates significant compliance risks, such as: 

• Violations of ERISA: Not verifying eligibility may breach fiduciary duties under ERISA and open employers up to lawsuits or DOL penalties. 
• Non-compliance fines: Federal healthcare laws like HIPAA expressly prohibit employers from covering ineligible individuals. Violations can warrant fines from $100 to $50,000 per dependent. 
• Reputational damage: Media coverage of eligibility compliance issues can severely harm an organization’s public image and employee morale. 

By taking a proactive approach to dependent audits, employers mitigate these risks and create significant cost savings opportunities. 

Advantages for organizations: 

• Significant cost savings by only covering truly eligible dependents. Average savings range from $400 to as much as $3500 per ineligible dependent removed per year. 
• Reduced liability and compliance risk related to covering ineligible dependents. Avoid expensive lawsuits, government fines and reputation damage. 
• Increased data integrity in HR systems from regular eligibility checks. Outdated or incorrect dependent info is removed. 
• Tax savings when ineligible dependents are removed from pre-tax health and welfare benefits like medical, dental and vision plans. 

Advantages for employees: 

• Protects employees from accidentally allowing ineligible dependents to remain on their benefits which could be considered insurance fraud. 
• Ensures only valid dependents are covered, which helps keep contribution rates and premiums in check. 
• Provides opportunities for employees going through major life events like divorce or separation to re-evaluate coverage needs.