In the complex landscape of employee benefits, organizations strive to provide comprehensive coverage for their workforce. One critical aspect of managing benefit programs involves conducting regular audits to verify the eligibility of dependents. A dependent verification audit is a systematic process aimed at ensuring that only qualified individuals are covered under a group health insurance plan.
Understanding dependent verification audits
A dependent verification audit is a methodical examination of the eligibility of dependents enrolled in an organization’s group health plan. Dependents typically include spouses, children, and sometimes other family members who may be eligible for health insurance, dental coverage, and other employee benefits.
Key components of a dependent verification audit
- Documentation Review: During an audit, participants are required to submit specific documents to verify the relationship between the employee and their dependents. Commonly requested documents include marriage certificates, birth certificates, and tax documents.
- Communication: Clear communication is vital throughout the audit process. Employers should inform employees about the upcoming audit, explain the required documentation, and provide assistance to ensure a smooth verification process.
- Gather Documentation: Employees should have required documentation in time for the audit. If an employee doesn’t have access to required documentation, they’ll need to request them from a state, county, foreign embassy or consulate. Failure to provide documentation will likely result in the removal of an unverified dependent from coverage.
Why perform dependent verification audits?
- Cost control: Removing ineligible dependents from group health insurance plans realizes significant savings through reduced premiums and lower administrative costs.
- Compliance: Dependent verification audits help organizations maintain compliance with rules outlined in the plan summary.
- Minimize Risk: Reduce penalties and litigation risk related to ERISA and Sarbanes-Oxley.
Types of dependent verification audits
Typically, providers perform two types of dependent verification audits. Here’s how they work:
Initial audit: An audit of an organization’s entire enrolled population with the purpose of identifying and removing ineligible dependents from coverage.
Ongoing audits: Ongoing verification service for newly added dependents with the purpose of preventing inelligible dependents from enrolling into coverage.
Outsourcing dependent verification
Outsourcing enables organizations to focus on core competencies while leaving the intricacies of dependent verification to specialized service providers. Employers can benefit from saving time and lowering costs, while experts navigate compliance and regulatory requirements.
When an audit identifies ineligible dependents, it can lead to difficult conversations about losing coverage. Including a neutral third-party in the process fosters a sense of trust among employees and helps maintain a positive organizational culture.
This is where we come into play…
On average, ebm’s dependent verification services help save employers between 5-8% on annual total health plan costs. We’ll work with you to develop a project timeline that meets your goals and objectives. We do the heavy lifting while you focus on what matters most: your people.