Newer Alternatives for Lowering Health Care Costs Fully Insured and/or Self Funded Plans

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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