Each year, employers invest heavily in providing quality healthcare benefits. But what many don’t realize is that a portion of those dollars may be going toward coverage for individuals who shouldn’t be on the plan at all.
Ineligible dependents often go unnoticed — not out of fraud or intent, but because of simple errors, lack of clarity, or the absence of a verification process. The result is higher premiums, inflated claims activity, and thousands of dollars in unnecessary spending.
Common examples of ineligible dependents
Mistakes in dependent enrollment can happen more easily than you’d think. Some of the most common ineligible dependents include:
- Divorced spouses still listed on the plan
- Children over the age limit or no longer meeting student requirements
- Stepchildren or foster children no longer in the employee’s custody
- Extended family members accidentally added
These types of oversights often stem from confusing plan language or a lack of communication during life events and open enrollment.
The hidden costs add up quickly
The average annual cost of covering one dependent can range from $3,500 to $4,500. Multiply that by just a handful of ineligible dependents, and your organization could be losing tens of thousands of dollars per year in premium costs alone — without factoring in the impact of additional claims activity on future rate hikes or stop-loss coverage.
Why this happens
Most health plans rely on the honor system, expecting employees to accurately self-report dependent eligibility. But during open enrollment or other stressful life events, it’s easy for mistakes to slip through — and most HR teams simply don’t have the bandwidth to catch them all.
A practical solution: dependent verification
Rather than overhauling your entire benefits strategy, consider implementing a dependent eligibility audit. These audits require employees to submit documentation to verify each dependent meets your plan’s criteria.
Whether performed as a one-time clean-up or on an ongoing basis, dependent verification is a straightforward, low-disruption way to:
- Reduce unnecessary premium spend
- Improve compliance with plan eligibility rules
- Support long-term cost containment
- Create a fair and equitable benefits environment
Protecting your bottom line with dependent verification audits
Dependent verification is not about cutting corners — it’s about protecting the value of your benefits program. With the right approach and communication, audits can deliver measurable savings while reinforcing accountability across your organization.
