There comes a time in every child's life...when they're no longer eligible for coverage under their parents' insurance plans. With a few exceptions, that time comes at age 26, when your employees' children need to find their own health insurance. That doesn't mean they always move on when they should, though, or that adult children are the only ones incorrectly covered. Divorced and ineligible spouses can inflate your number of participants as well. In fact, if you're not auditing your dependent population, we've found that 3-5% of your participants shouldn't be covered by your insurance (we've even seen up to 15% in some cases).
A Kaiser Family Foundation study in 2015 showed the average family health insurance premium is $17,545 (versus $6,251 for single coverage). The administration costs add up, too. All in all, dependent audits could save you at least $2,500 per plan member per year. Any plan that covers participants other than the employee needs to have a dependent verification process.
How do you provide coverage to eligible dependents while controlling costs associated with ineligible participants? You make the most of your dependent audit. Here's how.
1. It's a Process
Having a dependent audit once and calling it a day is only slightly more effective than having no audit at all. Use this first audit to put a process in place for continuing dependent eligibility measures, and stick to it! If you use My Benefit Express™, you can include ongoing dependent verification as part of your enrollment process going forward. You can then keep track of employees' children as they age out of eligibility and require documentation for spouses.
Avoid these top risk factors for improperly covered dependents:
- High employee turnover without keeping up on documentation
- Infrequent dependent eligibility audits
- Not requiring documentation during initial enrollment and life events
2. Talk it Out
In your first audit, you may have participants who don't respond or don't provide proper documentation. Make sure you have a plan in place! Will you have an amnesty period for non respondents? Continued communication is key here; with a dependent audit, we can schedule it for you throughout the audit period.
3. Call for Backup
For a successful dependent audit, you need executive leadership buy in. To do this, you need to be able to demonstrate the return on investment from an audit. Through our extensive experience, we've been able to develop a formula for estimating your ROI. For example, a plan with 1,000 covered dependents can expect an approximately 225% ROI in the first year after an audit. Dependent audits bring results. Clear communication explaining the rationale behind your audit will reduce any pushback, especially when it comes from your leadership team.
With the right partner, one who meticulously handles every record and is dedicated to ensuring your success (hi!), dependent audits can pay for themselves in the first year. They'll reduce your liability and control costs so you can better serve your eligible plan participants. Ready to take the next step? Estimate your ROI from a dependent audit here: