By Steve Niemczewski
Dependent eligibility verifications are widely considered to be an essential tool when evaluating ways to save on ever rising health care costs. At their core, these programs ensure that valid relationships exist between employees and their dependents. They are typically cost effective programs designed to be simple to administer by benefits and human resource departments. They help ensure compliance with regulations such as Sarbanes-Oxley and the Patient Protection and Affordable Care Act (PPACA). They are great for helping eliminate fraud, waste and abuse. They help to protect benefit levels and defray future increases to premiums and other out of pocket expenses incurred by employees. Perhaps most importantly, they yield quick and significant cost savings for companies that perform them by removing 5-10% of dependents who are not eligible.
However, even with all of this, many companies are hesitant to implement a Dependent Eligibility Verification (DEV) program.
Why?
Most often, small, mid-size and family owned organizations point to their company culture as a reason not to perform a verification. Often, these companies have developed a paternal environment, and employees are considered part of the “family”. Leaders in these organizations worry that they will alienate their workforce, or that it will appear they no longer trust their employees should they ask them to prove their relationship with their dependents.
These concerns are valid, and should be taken into account when evaluating a DEV program for your company. Many times, company culture is a source of pride for an organization. Positive cultures are something that may have evolved over decades, or have been deliberately implemented by leaders and entrepreneurs.
Regardless of how companies have arrived at their culture, dependent eligibility verification fits in perfectly with the paternal attributes of these employers. By fostering a “family” environment, it becomes important to ensure that you are looking out for the best interests of employees as a whole.
In order to understand how a DEV can protect your employees, it is important to understand how it is that ineligible dependents come to be on health insurance rolls. The two most common ways are attributed to misunderstanding the eligibility rules, and knowingly adding someone to the plan the employee is aware is not a dependent. A misunderstanding may result from a family child who is living with, and being financially provided for by the employee, but who is not considered a dependent by the health plan rules the company has adopted. An employee who knowingly has an ineligible dependent on the plan may not have removed their spouse following a divorce, or may have added an unrelated person, such as a neighbor, onto their medical plan.
When companies learn that there are both inadvertent and deliberate reasons that ineligible dependents wind up on company sponsored health insurance plans, it becomes important to ensure that the dollars paid for health care coverage are spent on employees and only their eligible dependents. With as much as 10% of a company’s health care budget being paid out for ineligible dependents, it becomes easy to see how ineligible dependents, regardless of how they wound up on the plan, can negatively impact the employees and dependents who are entitle to the coverage. By putting the fears a DEV might have on company culture ahead of the financial well-being of the health plan, companies are putting their employees at risk of being subject to lower coverage levels, higher deductibles, increased out of pocket premiums, prescription co-pays, and office visits, just to name a few.
When conducting a dependent eligibility verification, it is important to make the process as simple as possible for employees to complete. Allowing multiple options to prove eligibility is are critical to ensure the minimal impact felt by employees. Most important, is how you choose to communicate with employees. Frequent and straightforward communications are essential in simplifying the process, and in informing employees of the benefits of dependent verification for them individually and as a corporate family.
Simply put, dependent eligibility verification programs are designed to safeguard the employee family. With limited financial resources, ineligible dependents siphon precious health care dollars from the employees and their eligible dependents who deserve it. By not adopting dependent verification programs, companies are leaving their employee family and culture open to a swift degradation of employee benefit levels.
So, next time you are asked about dependent eligibility verification, don’t worry about your culture, simply answer…why not?