The simple fact is that almost every employer is carrying dependents on its plan that fail to meet its eligibility requirements. For far too long, employers have relied on the honor system to verify dependent eligibility. Even when combined with an employee affidavit, the honor system subjects employers to unnecessary liability. Whether attributed to a lack of understanding of eligibility rules by the employee or outright fraud, the bottom line is ineligible dependents are enrolled in health plans because proper preventative measures are not being taken.
In addition to the economic incentive, the dependent eligibility verification services help fulfill your fiduciary responsibility to manage the plan for the exclusive benefit of eligible participants and beneficiaries. The systematic verification of dependent eligibility demonstrates your commitment to running the plan in a fiscally responsible manner.
What is a Dependent Eligibility Verification Program?
A dependent eligibility verification program is the inspection of an employer’s health benefit plan to ensure enrolled dependents are actually eligible to receive coverage. The key benefits are typically as follows:
- Reduce overall healthcare costs by eliminating claims paid for ineligible dependents
- To comply with laws related to operating a benefit plan as designed, and for the exclusive benefit of plan participants
A dependent verification program from Bonadio could identify and remove between 6 to 12 percent of the dependents from your health plan that do not actually meet eligibility requirements. With annual healthcare costs ranging from an average of $3,000 to $5,000 per dependent, you’ll save real dollars right away. Savings can be even greater if the plan is paying substantial medical claims for an ineligible dependent. All of those savings go right to your bottom line.
Why Should You Perform a Dependent Eligibility Verification Program?
The benefits of a dependent eligibility verification program are various, but include the following:
- Comply with the Law
Checking for ineligible dependents helps to ensure your organization is meeting its fiduciary responsibility to manage the plan for the exclusive benefit of eligible participants and beneficiaries.
- Control Wasteful Spending
An audit will allow your company to identify and remove ineligible dependents that are being covered by your company’s health plan, and costing you millions of dollars each year.
- Establish On-Going Eligibility Verification Standards
For the most substantial reduction in future costs, conduct follow up audits on a regular basis to ensure that ineligible dependents do not migrate back into your plan.
Projected Cost Savings – Case Study Example
- Organization with 300 employees and 600 dependents
- Estimated savings per dependent, per year of $3,500
|Savings Per Dependent
|First Year Cost
Bonadio conducts comprehensive or full verification, meaning employees must submit documentation for each dependent to confirm they meet eligibility requirements. The following steps provide a high level summary of the dependent eligibility verification process.