In the dynamic world of optimizing operational efficiency and maximizing cost savings, employers are continually exploring innovative solutions. One often overlooked yet financially beneficial strategy is implementing dependent verification audits. These audits present significant opportunities for businesses aiming to cut costs and protect their financial health.
How dependent audits reduce health care spending
Health insurance expenses frequently make up a large portion of an organization’s budget. Dependent verification audits help reduce these costs by ensuring that health coverage extends only to eligible dependents. By removing ineligible dependents, employers avoid overpaying premiums and minimize unnecessary financial drain.
Covering ineligible dependents is a silent drain on an organization’s resources. Conducting these audits can save organizations on premium dollars, as they no longer pay for dependents who should not be covered. In this way, dependent audits directly impact health care spending, helping businesses save on one of their most significant expenses.
Minimizing compliance risks
In addition to cost savings, audits also help minimize compliance risk. Employers, as plan sponsors, have a fiduciary responsibility to ensure that only eligible dependents are enrolled in coverage, as defined in their Summary Plan Description (SPD). Failure to comply with regulations like ERISA can result in hefty penalties, which may amount to as much as $1,000 per day for plan administrators who violate the rules.
Dependent verification audits serve as a proactive measure to ensure compliance. Even one ineligible dependent on a plan can expose employers to significant financial risks. Regular audits help employers maintain compliance and avoid costly fines.
Protecting your bottom line
To safeguard your bottom line, identifying and removing ineligible dependents is essential. Employers who proactively conduct dependent verification audits can see a meaningful reduction in health plan costs. As businesses continue to navigate financial challenges, these audits offer an effective solution for keeping health care expenses under control.
At ebm, we help employers save between 5% and 8% annually on health plan costs through our dependent verification services. Learn more about how ebm can protect your bottom line by conducting a dependent verification audit today.
