CMO at Verifi1
Are you a company that employs over 100 people?
Are you a broker that represents companies that employ over 100 people?
Are you the business manager for a Taft-Hartley Trust?
Are you the administrator for a municipality, or school district, or state agency?
If you answered “yes” to any of the aforementioned questions, then I have some sobering news for you:
If you have never completed a dependent eligibility verification - or have not continued to verify new hires, open enrollment status changes, or off cycle life events, your company – or the company you represent – is 100% GUARANTEED to lose money every year providing unbudgeted healthcare dollars to people who aren’t eligible.
You shouldn’t fall under the mistaken notion that oversight from insurance carriers, TPA’s, or even occasional random “spot check” audits from your staff members will remedy this problem. That’s because the entry points and pathways for people to add ineligible dependents aren’t straightforward or universal in their application.
Historically, a large percentage of the ineligible dependent population results from folks misinterpreting plan rules (“I thought my nephew qualified for my company sponsored health coverage, because he lives with me for six months of the year, and I provide him with food and clothing.”)
Not surprisingly, the other sizeable category of those identified as ineligible are the result of out and out fraud (“I didn’t tell my employer I was divorced, because I didn’t want to pay for a more expensive individual plan for my ex-spouse”.)
Ineligible dependents can also result from employers not properly validating and tracking “life event changes” - which involve employees attempting to onboard dependents off-cycle, that they initially may have declined coverage for during their open enrollment period, or at time of hire.
Finally, the remainder of the ineligible dependent pool is comprised of dependents who should have been removed from policies by carriers (due to age limit parameters, or other summary plan description (SPD) rules), but remain covered. The employer unfortunately, faces the risk of unforeseen claims expense if these presently dormant individuals access their benefits at any point in the future.
This problem will never “self-correct”, and the faucet will continue to drip – to the tune of over $5,000 per ineligible dependent per year.
Those drips can quickly turn into a full-blown spending deluge, when you consider that every ten ineligible dependents amount to $50,000 in healthcare expense. As a result, if you are a company operating on a typical 5% profit margin, you would need to sell, invoice and collect $1,000,000 in revenue to cover the cost of just those ten ineligibles.
The bottom line: tighten up the spigot now, or face the flood of unbudgeted benefits expense that is certain to come later.