Why “Risk Management” Is No Laughing Matter Within the World of Employer Sponsored Healthcare Benefits.

By David Chojnacki, Chief Revenue Officer at Verifi1

During the course of a classic “Seinfeld” episode, George Costanza (Jason Alexander) determined that having to give a speech on “risk management”, was a task too arduous, too boring, and most importantly, too complex, that he promptly turned over the project to a protégé.

In the fantasy world of television situation comedies, the ability to successfully lampoon a topic as prosaic and colorless as risk management can be challenging to the writers, in order to generate the anticipated laughter from an audience. In the real world of employer sponsored benefits, the challenge of implementing a sound risk management/risk mitigation strategy has much higher stakes involved, and if not addressed adroitly, will certainly be no laughing matter when your “audience” of shareholders and corporate executives reviews your bottom line.

Dependent eligibility verification is a primary risk management/risk mitigation strategy. Consider that at any point in time, a dependent you are covering can quickly become a high-cost claimant - including those of the million dollar+ variety. If the dependent is ultimately determined to be ineligible, stop loss claims can be denied, and you, the employer, will be responsible to cover the incurred claims.

Take into account the following astounding – and concerning – statistics regarding this topic:

• - High-cost claimants account for over 30 percent of total spending on healthcare benefits
• - High-cost claimants are responsible for over $120,000 annually in self-funded expenditures
• - High-cost claimants cost their health plans in excess of $50,000 per year
• - The number of $1,000,000 claims has increased by 90% since 2010.

Additionally, by not performing a dependent eligibility verification, employers run the risk of non-compliance with ERISA if they fail to adhere to plan eligibility rules as stipulated in plan documents. The resulting fines that could be assessed, can substantially inflate your “unbudgeted healthcare expense” category.

By definition, risk management refers to the practice of “identifying potential risks in advance, analyzing them, and taking precautionary steps to reduce and curb the associated risk.” Dependent eligibility verification initiatives are a proven commodity in the field of risk management and risk mitigation tools that an employer can and should embrace.

In the end, there’s nothing funny about exposing your business to undue risk.