Businesses Auditing More Employees On Dependents' Health Insurance Eligibility
Businesses increasingly areconducting insurance audits of employees to ensure that all dependents areeligible for health benefits, Newhouse/HoustonChroniclereports. Some consultants say that, on average, about 3% to 12% of dependentsenrolled in an employer-sponsored health plan are not eligible. According to Newhouse/Chronicle,"With insurance costs rising faster than inflation for a decade," themoney saved by an audit "quickly dwarfs the expense of conducting an audit."
Daniel Priga, a principal for Mercer, said, "There has been asignificant growth of interest in conducting these types of reviews."Susan Johnson, a senior consultant at Watson Wyatt Worldwide, said that use of insurance auditshas "grown exponentially in the last 18 months." According toJohnson, the audits are most common in "high turnover industries,"such as service, retail and banking.
Audits typically begin with a reminder to employees about which dependentsqualify for coverage and an explanation of the proof that will be required tomaintain benefits for dependents. Many employers offer an amnesty period whenemployees can remove dependents from the plans without penalty. Consultants saymany of the problems uncovered during an audit are unintentional and resultfrom "inattention or honest errors," Newhouse/Chroniclereports. Common areas of confusion or oversight include a child dropping out offull-time higher education, divorce changing a dependent's status and marriagechanging a dependent's status, according to Newhouse/Chronicle.
General Motors is in the process of auditing its entire workforce of about one million employees and their dependents, according toMichelle Bunker, a spokesperson for the automaker. Bunker said, "For everyone [dependent] that we drop, it's about $1,000 savings."
Newhouse/Chronicle reports that Chrysler Group and Ford Motor spokespeople said the automakers inthe past have audited their employees and that both have removed thousands ofineligible dependents from their rolls. In addition, both automakers haveallowed amnesty periods, according to Newhouse/Chronicle (ReynoldsLewis, Newhouse/Houston Chronicle, 1/12).
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