What are the reasons dependents are found to be ineligible?
A variety of factors contributes to ineligible dependents covered on the employer medical plan, but the most common reasons are inconsistent, or a lack of, internal eligibility processes and procedures; poor communication about eligibility requirements; multiple acquisitions and divestitures, leading to multiple plans and eligibility criteria; or a shortage of internal HR resources to manage and/or conduct periodic audits of dependent eligibility.
Consequently, dependents who don’t meet the eligibility requirements set forth by the plan sponsors include overage dependents, such as children who are no longer students; stepchildren following a divorce of the natural parent; extended family dependents under no legal guardianship; and unmarried partners with no recognized relationship under the plan or children of live-in partners with no legal relationship.
What are the steps to conducting an audit?
The first step is to get executive management buy-in. Obtaining management buy-in is critical. Presenting the facts about how HR is helping to drive cost reductions, improve legal compliance and promote operational excellence establishes the business case for investing in an audit and also helps to advance the brand perception of the internal HR team.
The second step is arranging options for those removed from the corporate plan. The most successful tactic to combat negative perceptions of an audit is to create coverage options for dependents who are removed.
The third step is to overcommunicate. Employers should communicate the mutual benefits of controlling health care costs for employees and the organization, such as money to invest in research and development, training, etc. The communication campaign should contain a personalized notification letter that includes:
- Explanations on the purpose of the audit, guidelines to protect confidentiality, the name and experience of the company hired to conduct the audit, and information about the call center that will answer questions about the audit
- Information on which dependents are eligible and a list of the individuals currently enrolled under the employee’s coverage
- A list of valid documentation needed to verify all dependents, such as a birth or adoption certificate, marriage license, etc.
- A clear statement of the consequences of keeping ineligibles enrolled that emphasizes the benefit of arranging for proper coverage through other insurance to avoid claim denials with no recourse to other coverage after expenses have been incurred
The fourth step is involving a third party whose core business is the administration of eligibility. This ensures the process includes best practices (such as offering health options for those removed) and adds a layer between you and your employees that can help allay concerns about confronting employees about the legitimacy of their dependents.
Candice P. Mill is senior vice president with Aon Risk Services and chief operating officer of the Health and Benefits Practice in Pittsburgh. Reach her at (412) 263-6387 or [email protected].
