The process of eligibility verification audits
Companies and their benefits teams are always looking for ways to lower their health care costs. Businesses may offer more consumer-driven coverage or wellness initiatives to cut their expenses as much as possible. These organizations may be overlooking a critical expenditure, however, in the form of ineligible dependents on their insurance program. Today, 8 percent of people enrolled in company-provided coverage are not qualified, according to the Government Finance Officers Association. To reduce this number, many businesses partake in regular eligibility verification audits. Let's breakdown the procedure:
3 common problems
There's a lot of work that goes into employee verification. Most of the time, companies will work with a third-party service provider, like Secova which specializes in benefits administration with a focus on eligibility audit services to complete the necessary audits. These partners offer expertise and information on current trends and health care requirements. Organizations will often encounter three issues or reasons for a group of ineligible dependents:
- Employees haven't reviewed eligibility rules.
- Workers aren't up to date on new requirements or changes to coverage.
- Eligibility or plan jargon is too confusing to understand.
As a result, businesses may see more ineligible dependents on their health care programs than initially expected or accounted for.
Children over 26
While many people may believe that failing to remove employees' children who have reached or surpassed the cutoff age for coverage – 26 years old – may be one of the largest reasons for ineligible dependents, this is not the case. In fact, many businesses have a system that notifies their benefits team of a person's age and automatically removes these young adults from their parents' insurance plan.
Children over the age of 26 aren't the issue. Instead, kids who aren't the biological children of workers tend to be a more prevalent problem. Nieces, nephews and those under the care of the insured – although not legally – are some examples of ineligible dependents costing organizations additional money.
Documentation is key
To complete the audit process, verification services partners ask for documentation of the relationship between the employee and his or her dependents. To authenticate spouses, workers must provide a marriage certificate and proof of joint tenancy, such as a mortgage agreement with both partners' names. For children, people must present birth certificates that state their parental liability or a document showing parental guardianship if the kids are not biologically theirs. In many cases, verification service providers have to issue multiple requests for this documentation and rely on HR and benefits teams to acquire the appropriate forms.
There are two common situations that arise from these audits:
- Documentation is incomplete: Employees don't have everything they need on file to prove dependent eligibility.
- No documentation at all: Workers don't turn in the requested records because they know they have ineligible dependents.
As soon as ineligible dependents are no longer covered under company health care programs, the organizations start saving money. These organizations no longer have to pay claims for unqualified people. Although this is a result for businesses to look forward to, the verification process can take months to complete. It may be quite a responsibility, but completing eligibility audits will help companies reduce their health care costs and provide better insurance for eligible dependents, especially with the assistance of a service provider.