On average, there are two dependents for every subscriber on a medical plan. When self-funded employers allow employee’s dependents on their medical plans, they accept the risk that comes with the dependent’s claims. For fully insured groups, carriers will often investigate the legitimacy of a dependent when that dependent files a major claim – and if it happens that the dependent is ineligible for the plan, the carrier will refuse to provide coverage. For this reason, it is extremely important for every employer to verify that all dependents on the plans are able be covered under the plan according to the certificate.
Unbeknownst to the employer, most medical plans have 4-8% of dependents on a plan are ineligible for coverage. When you consider that the average employer cost per dependent is $3,500 and associated ERISA noncompliance fines, employers realize large savings when they reduce the number of ineligible members on their plans. A Dependent Eligibility Audit is able to help identify and reduce those people in order to maintain order. The audit acts as an internal cost control measure that helps maintain employer fiduciary responsibility, compliance, and reduced risk of stop-loss claims and denial. It requires employees to present marriage/domestic partner certificates, birth certificates, legal custody or guardianship documents, etc. to prove that the dependents they bring onto their plan are legitimate.
According to a case study from our trusted partner BMI Audit Services, a client with 548 employees and 1,137 dependents identified 22 dependents that were ineligible, 7 dependents that were incomplete and 54 dependents who did not comply with the audit resulting in $290,000 in annual savings. If a dependent eligibility audit may be a good fit at your company, contact Axion RMS to create your strategy today!