Employee Benefits | FJG/FYI
Dependent Eligibility Audit
Chances are you would be surprised to know how many ineligible
dependents you may be covering. In fact, 5% to 15% of the dependents covered by most employers’ corporate health plans are ineligible. Beyond the obvious excess claims exposure and higher health care costs this creates, ineligible dependents can also present additional issues like Sarbanes-Oxley risk to public companies and exposure to the plan fiduciary under ERISA and the Exclusive Benefit Rule.
A dependent audit is a solution to help you identify ineligible dependents. The dependent audit is a comprehensive investigation confirming whether the employees and dependents currently listed as eligible on an employer’s plan should indeed be covered. Audits review the plan’s eligibility criteria and cross reference to participants that no longer meet those requirements. An ineligible person may be defined as an employee, spouse, ex-spouse, child, grandchild or significant other.
There are numerous avenues to pursue for this service. It can be as simple as a cost-neutral Amnesty Audit or as complex as a fee-for-service comprehensive Documentation Audit. It can also be done stand-alone or bundled and subsidized by a Voluntary Benefits communication.
Dependent eligibility audits typically include:
- Amnesty Period: In conjunction with the employer, an amnesty
period is specified during which employees can volunteer information regarding ineligible dependents without consequence. - Audit Communications: Employees are notified of important information before the audit, including documentation requirements and amnesty period details. Follow up communication is distributed in the wake of the audit as well.
- One-on-One Employee Enrollment/Audits: Audits can be bundled with Voluntary Benefits and accomplished during one-on-one interviews with employees. In this case the cost is typically partially or fully subsidized. In this scenario, employees are often required to verify their dependent data (e.g. documentation, affidavit, etc.) with the understanding that they are responsible for its accuracy.
- Data Return/Reporting: Following the audit, employers are provided detailed reports and revised dependent data files.