Employee benefit programs are a cornerstone of a company’s commitment to the well-being of its workforce. These programs often include health insurance, dental coverage, and other perks that extend not only to employees but also to their dependents. To ensure the integrity of these programs, many companies are turning to dependent verification audits. In this blog post, we’ll explore the reasons why completing a dependent verification audit is a crucial step for both employers and employees.
What is a dependent eligibility verification?
A dependent verification audit involves a systematic review to assess the eligibility of individuals enrolled as dependents in an organization’s group health plan. Dependents usually comprise spouses, children, and occasionally other eligible family members entitled to health insurance, dental benefits, and other perks provided by the employer.
The goal of a dependent verification audit is to identify and remove ineligible dependents from coverage. Removing ineligible dependents is necessary for a couple of reasons. First, employers need to comply with the rules stated in their plan’s Summary Plan Description (SPD). Employers’ group health plan has laid out who is ineligible in their plan, and employers have a fiduciary responsibility to adhere to those rules. Secondly, removing ineligible dependents helps free up resources that are being spent on dependents who do not belong on the plan.
How does a dependent eligibility audit work?
There are two types of audits. Point-in-time audits and on-going audits. Both audits are conducting using software specifically designed for dependent verification.
Initial Audit: A comprehensive examination of an organization’s entire enrolled population aimed at identifying and eliminating ineligible dependents from coverage.
Ongoing Audits: Continuous verification service for newly added dependents designed to prevent ineligible individuals from enrolling in coverage.
Why Should You Complete a Dependent Verification Audit?
Cost control
One of the primary motivations for conducting a dependent verification audit is to control costs. Providing benefits to ineligible dependents can significantly strain a company’s budget. By verifying the eligibility of dependents, employers can ensure that their resources are allocated efficiently, preventing unnecessary expenses and keeping the cost of benefits manageable.
Fairness and equity
Ensuring that only eligible dependents are covered promotes fairness and equity among employees. When some individuals take advantage of the system by including ineligible dependents, it can create resentment among other employees who play by the rules. A dependent verification audit levels the playing field, fostering a sense of fairness and equity within the workplace.
Compliance with regulations
In an era of increasing regulatory scrutiny, compliance with rules and regulations is paramount. Dependent verification audits help organizations adhere to legal requirements and industry standards. By confirming that benefit programs are only extended to eligible dependents, companies can avoid legal complications and potential fines associated with non-compliance.
Protection against fraud
Unfortunately, fraudulent activities can occur, even within the realm of employee benefits. Individuals may try to submit false information to gain access to benefits illegitimately. Dependent verification audits act as a safeguard against such fraudulent activities, helping companies identify and rectify instances of deceit.
Employee education
The audit process provides an opportunity for employee education. Many individuals may not be fully aware of the eligibility criteria for dependent benefits. The audit serves as an educational tool, helping employees understand the rules and regulations governing benefit programs. This fosters a culture of transparency and responsibility.
Conclusion
In conclusion, completing a dependent verification audit is a proactive measure that benefits both employers and employees. It not only helps control costs and ensure compliance with regulations but also promotes fairness, equity, and accuracy within the organization. By taking the time to verify the eligibility of dependents, companies can strengthen their benefit programs, protect against fraud, and cultivate a workplace culture that values transparency and responsibility.
