Who’s using your health insurance benefits?

Health Insurance Audits help control costs

One of the effects of the just-passed health care reform legislation is to open up employer plans to more dependents. Under the new rules, you must allow employees to keep their children on their plans until age 26.

Given this expanded pool of beneficiaries, it’s more important than ever to be sure everyone who’s listed as a dependent on your plan is actually eligible. Some employees may try to sneak friends or relatives onto the plan, of course, but in other cases it’s simply a mistake — someone used to be covered but shouldn’t be anymore, or they should be on another plan. Whatever the reason, ineligible dependents can result in higher premiums for your company and your employees.

HR consultant Valerie Grubb, writing in HR Florida Review, urges employers to conduct dependent audits. Big companies such as Boeing, General Motors and American Airlines were among the first to conduct such audits, but, she says, it’s something companies of all sizes should be doing now.

The savings can be substantial. A conservative estimate is that 3 to 8% of dependents on existing plans aren’t eligible. Some peg the number much higher — up to 20%, Grubb says.

Cleaning up your eligibility rolls can make you look like the Big Bad Wolf to some employees, she warns, so it should be approached delicately. She recommends that HR managers:

• Remind employees of the qualification requirements before the audit
• Offer a grace period of 45 to 60 days to allow employees to make alternate arrangements for ineligible dependents or get the right documentation
• Set up an appeals process before you begin the audit
• Explain to employees that the audit is a necessary measure to help keep premiums affordable