The document discusses dependent eligibility audits for employer-sponsored health plans. It outlines the stages of an audit: 1) Planning, 2) Common objections, 3) Communication, 4) Documentation gathering and authentication, 5) Data accumulation, and 6) Results. Conducting audits ensures only eligible dependents are covered, which lowers costs for employers and employees. Audits also help employers meet their fiduciary responsibilities under ERISA.

1. Dependent
Eligibility Audits
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2. Newer Alternatives for Lowering Health
Care Costs
Fully Insured and/or Self Funded Plans
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3. OBJECTIVE
To insure that employees who claim dependents on
the employer-sponsored health plan are truly eligible
dependents based on the definition of a dependent as
outlined in the Plan Document
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4. Presentation Overview
The stages to a Dependent Eligibility Audit are:
1. Planning
2. Common Objections
3. Communication
4. Documentation
5. Data Accumulation
6. Results/Findings
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5. Presentation Overview (cont’d)
1. Planning
• Audit Format
• Overall Project Goals and Objectives
• Timeline: ideal prior to open enrollment
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6. Presentation Overview (cont’d)
2. Common Objections
• Trust issues from employees as this is a delicate
undertaking
• Initial reaction to cost of the project
• Sensitivity in a union environment
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7. Presentation Overview (cont’d)
3. Communication is KEY
• Amnesty Phase – no disciplinary action
• Structure of communication to fit corporate culture
• Additional phases as applicable
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8. Presentation Overview (cont’d)
4. Documentation Gathering & Authentification
• Burden is on the employee to prove that a covered
dependent is actually entitled to coverage
- That usually means providing documentation such
as copies of marriage certificates, birth certificates,
adoption agreements, income tax returns and letters
from colleges.
• Type of documentation, FAQ’s, examples
• Onsite authentication vs. documents mailed, faxed, or
e-mailed
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9. Presentation Overview (cont’d)
5. Data Accumulation
• Call Center or an experienced live team available to
answer employee questions regarding the audit,
acceptable documents, etc.
• Tabulate responses from employees’ and maintain in a
database
• Analyze responses and provide summary of findings
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10. Presentation Overview (cont’d)
6. Results
• Cost benefits to employer
– Reduce health care costs
– Lower future administrative costs
– Lower Premiums
– Lower cost for employee share with savings
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11. Business Impact
• ERISA Fiduciary Compliance
• Return on Investment
• Without a process in place to protect an employer’s
health plans, covering ineligible dependents will continue
to put the organization at risk
• Employees who cover ineligible dependents not only
increase the cost for the employer and fellow employees,
but also contribute to eroding an organization’s ethical
standards.
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12. Business Impact (cont’d)
Options for measuring ROI
• Calculate future reinsurance premiums and/or
administrative costs on a go-forward basis
• Calculate actual or expected claims paid for ineligible
dependents
• Seek restitution from employees for ineligible
dependent(s)’ claims previously paid, or for premiums
and administrative fees
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13. Business Impact (cont’d)
ERISA Fiduciary Compliance
• Plan sponsors have a fiduciary responsibility to minimize
risk to the health plans
• Plan sponsors’ failure to protect the health plans from
exposure caused by covering ineligible dependents is a
violation of the fiduciary responsibility as defined by
ERISA.
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14. QUESTIONS & ANSWERS
For more information, call:
Phyllis Hoff
(314) 692-5887
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