Sister Wives - The Importance of Dependent Audits
I'm often sucked into the world of reality television. For me, this mindless entertainment is a great way to escape and unwind after a busy day of work. One program that has continually intrigued me is Sister Wives. For those not familiar, let me enlighten you. This show documents the life of a polygamist family which includes husband (Kody Brown), his four wives and their 18 children. Now that I've caught you up on the dirty details, I have to share the nagging professional concern I’ve had since the start of the show: Does Kody try to insure all of these dependents on his employer’s health plan, even though three wives and three kids aren’t eligible? Enter the dependent audit.
Dependent audits have been growing traction for just shy of a decade. Audits help employers ensure they’re only providing company-sponsored benefit dollars to those who are truly eligible. Dependent verification is the crux of the audit which requires employees provide documented proof their insured dependents meet the requirements outlined by the administrator. Audits can have a significant impact, as an average of 5%-7% of dependents are covered in error. It also safeguards that fiduciary responsibility is being met. In helping many clients through this initiative, Assurance has identified important considerations when rolling out a dependent audit. Here are my top four – one for each sister wife:
- Consider an outside vendor.
Just as the sister wives outsource childrearing to each other, employers will want to consider outsourcing an audit to the professionals. An outside vendor will take the burden off the employer, creating a buffer to lessen conflict and guarantee objectivity. In addition, they’ll review plan document rules, develop communications and materials, and help to determine the documentation required for substantiation all while managing the intake and delivery process. It’s a must that the vendor of choice has a strong electronic and manual security storage system with a multilingual customer service base that has the appropriate hours to accommodate employee needs.
- Utilize employee communication.
To an employer, a dependent audit may seem like a no-brainer from a ROI standpoint. However, employees may feel their employer doesn’t trust them to be honest. If not appropriately communicated, employees may liken the process to a witch hunt to kick dependents off the plan. To avoid this negative perception, a thoughtful, frequent and culture-driven communication campaign will provide employees with a clear understanding of the overall goal of the verification. Communications should not only state the basis of the initiative, but also clearly outline the eligibility rules, timeframes for complying and actions that will be taken for non-compliance or dependent ineligibility. Communicating clearly, early and often is vital.
- Follow through.
The verification process will undoubtedly uncover dependents that aren’t eligible. It’s important to follow through with the actions initially outlined in the communication and making adequate resources available for employees to attain coverage for ineligible dependents. Keeping an ineligible dependent on the plan results in exposure to the employee as he or she might not only be committing insurance fraud, but may also be responsible for paying all the healthcare costs associated for paid claims. Oftentimes, eligibility errors go unrecognized by a health plan administrator until a major expense occurs. Upon a claim examiner’s review, the claim could be denied leaving the employee financially responsible. Furthermore, it’s a must that equal treatment be applied across the organization with every employee being held accountable to the same process, regardless of executive status.
- Analyze and report results.
Taking time to review and analyze the overall findings of the audit is an important factor. Not only do the results help to quantify the cost avoidance uncovered, but also provide the blueprint for establishing an ongoing dependent verification process. Employers will be able to gain a clear understanding of the trends associated with the enrollment of ineligible dependents, targeting appropriate messaging of eligibility rules. Reporting the results to leadership, employees and any other invested parties will demonstrate the financial impact, compliance adherence and commitment to the health and well-being of the plan and plan participants.
Even though your organization isn’t likely covering a plural family like the one featured on Sister Wives, a dependent audit still might be right for your organization. If you want to identify the estimated savings that could be uncovered through this initiative, check out our dependent audit calculator. And, if you're a reality TV fan, turn on Sister Wives, kick back and try to mentally calculate the cost of healthcare for the Brown family.
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