President, Verifi1
By now, most employers are well aware of the primary factors which prompts their enterprise to conduct both initial and ongoing dependent eligibility verification reviews. In a nutshell, this service provides an almost immediate savings to your sponsored benefits plan (as much as $5,000 realized per ineligible dependent removed), it protects your organization against catastrophic claims from dependents who should not be covered, and it reduces paid claim costs this benefit year, thereby lowering healthcare costs in future years.
Beyond those widely acclaimed advantages relative to conducting a dependent audit, here are three other points to ponder when you’re in the process of contemplating when to launch your own verification initiative:
1 - ERISA Requirements Mandate a Fiduciary Responsibility to Manage Your Health Plan Responsibly
Conducting a comprehensive dependent eligibility verification initiative demonstrates that the plan is in compliance with federal law by ensuring that only eligible dependents are on the plan and that the plan is administered in accordance with its corresponding documents.
2 - Sarbanes-Oxley Requires Employers Adhere To Stringent Internal Financial Controls
Sarbanes-Oxley dictates that there is a systematic review and maintenance of internal financial controls and records. Covering ineligible dependents may cause the plan to incur significant benefit costs which in so doing, demonstrates a deficiency of internal controls. If the financial impact is significant, independent auditors may consider the coverage of ineligible dependents to be a reportable incident to shareholders. By instituting a reliable and sustainable dependent eligibility verification platform, employers can eliminate this potential problem.
3 – Fair and Equitable Treatment of ALL Employees
With an effective “pre-verification” communications strategy established, once an employer rolls out a comprehensive dependent eligibility verification program, employees understand that when ineligible members use plan coverage – and resources - the cost of coverage invariably increases for everyone. Given the present chaotic state of health insurance coupled with a challenging economic and employment environment, more families may seek to cover ineligible dependents as a means to reduce their financial liability (and in so doing, shift their burden on to an employer and their employees, who should not be incurring that expense.)