With health care costs continuing to rise at a pace that far exceeds inflation, firms are looking for additional ways to reduce benefit costs. One option is a dependent eligibility audit. This is a systematic approach to making sure that your health plan covers only those who are eligible. This can be a significant cost saver. Goodyear Tire & Rubber reported reducing their dependant rolls by 13% and overall costs by 6% by implementing a dependant audit. These audits are really important for self-insured plans but also benefit fully-insured plans as well.
The purpose of the audit is to identify dependents that should no longer be covered such as children that have met the maximum age limit, divorced spouses or children impacted by a change in custody arrangements. In addition to the cost savings, not doing an audit may risk noncompliance with ERISA from failure to comply with plan eligibility rules as specified in plan documents.
The firm can do the audit internally or hire a third-party. As with anything related to benefits there are certain things to be considered in the planning and rollout of the employee communications. The audit is usually done in a two step process: an amnesty phase and then the documentation review phase. While disenrollment is not a COBRA qualifying event, the employer may decide to offer it provided that your insurer will permit it.
We are all looking for ways to make our benefit dollars go further. Eliminating the ineligible dependants makes sense.
