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Dependent Audit
Recover wasteful employee benefit costs by uncovering ineligible dependents
on your health plan conducting a Dependent Eligibility Audit in your organization
Today’s escalating health care costs are a critical business issue, impacting the profitability of many companies. As a result, employers are reviewing all elements of their businesses looking for cost savings including staffing, overhead and employee benefits.
We would suggest that the first place an Employer or Plan Sponsor should look is at the eligibility of their Dependent Population. There is no more participant friendly, cost effective way to reduce benefit costs without changing your plan design than a Dependent Eligibility Audit.
What is a Dependent Eligibility Audit?
A Dependent Eligibility Audit (Dependent Audit) is the examination of an employer’s health & welfare plan to ensure an enrolled dependent’s eligibility. This process verifies that the dependents identified by an employee are actually eligible to receive benefits. Dependents who do not meet eligibility guidelines are removed from the benefits plan often substantially lowering plan costs.
Why conduct a Dependent Eligibility Audit?
Leading industry experts and our own experience show that 5-12% of your dependent population may be ineligible for your benefit programs. At an average cost of more than $2,500 per dependent according to the latest Kaiser Survey on Employee Benefit Costs, you may be exposing your plan to significant liability.
Compelling reasons companies conduct a Dependent Audit are typically one or more of the following:
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Reduce Costs without changing the benefit plan structure. |
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Improve Compliance with applicable laws such as: |
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ERISA which requires that Plan Dollars are used for the sole benefit of employees and their eligible dependents |
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Section 125 of the IRC, which requires that the pre-tax treatment of benefit plan contributions apply only to those participants (employees and dependents) who are eligible for the plan. |
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Sarbanes Oxley – Section 302, which requires companies to adopt and maintain internal controls that include policies and procedures for “prevention or timely detection of unauthorized acquisition, use or disposition of the [company's] assets” that could materially affect financial statements |
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PPACA, which recently expanded the definition of eligible dependents to Age 26 for affected plans. |
When is the best time to perform a Dependent Eligibility Audit?
Pre-Open Enrollment (Recommended)
We recommend that employers conduct their audit in the 4 month period leading up to Open Enrollment. This approach will allow HR to focus on the audit separately from Open Enrollment, and allow employees who do not respond to the audit and have their dependents dropped, or to add them back on, assuming they provide the correct documentation at that time.
Post-Open Enrollment (2nd Best Option)
Another alternative is to conduct your audit in the period directly following Open Enrollment. This allows HR to use the Open Enrollment period as the Amnesty Phase of the audit potentially reducing the number of documentation audit requests that you send out during the Documentation Phase.
Regardless of the type of audit you conduct or the timing of your audit, we recommend that HR always use the Annual Open Enrollment period to reinforce the rules of your plan.
Why use an independent firm to perform a Dependent Eligibility Audit?
There is an employee relations aspect to conducting a dependent eligibility audit. The requirement to submit documentation: birth certificates, tax forms, and qualified support orders, may cause concern amongst your population over the privacy of their information and stir resentment. Utilizing an independent, 3rd party will create an arm’s length relationship between the employer and employee during this delicate process. In addition, specialized providers will have a high degree of experience and expertise in these situations.
What are the benefits of conducting a Dependent Eligibility Audit with us?
Through experienced staff, best practice processes, and proprietary software, Winston Financial offers a unique approach to dependent eligibility audits. Our employee-centric method has been proven to:
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Ensure that only dependents who are eligible to receive healthcare benefits do so |
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Produce results that are easily measured and generate an exceptional ROI |
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Complement existing and future strategies to contain healthcare costs |
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Opportunities to leverage additional service options including Benefits Administration Outsourcing, Enrollment Services and Voluntary Benefits |
Now is the time to start realizing savings on your plan.
For more information about working with Winston’s Dependent Eligibility Audit Team Contact Us or call an Audit Team member at 212.334.1000.
Client Case Study – Large US-Based Paper Manufacturing Company
Client Case Study – Large US-Based Paper Manufacturing Company
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