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January 6, 2016

Dependent Eligibility Audit Verifies Eligibility of Dependents and Retirees

Business Situation:
This client was looking for a dependent eligibility audit firm who could verify the eligibility of enrolled dependents for both active employees and retirees.  Additionally, they wanted to verify benefit eligibility for each retiree.

 
Client Profile:
  • City Government
  • 5,367 Employees and Retirees Covering 11,523 Dependents
Audit Finding:

  • 263 dependents/retirees (2.28% of total) failed to meet plan eligibility requirements.
  • Reasons for ineligibility included overage dependents, unreported divorces, failure to meet retiree subsidy requirements, or dependents where the employee did not have legal custody.
  • 108 spouses had other coverage available should have been paying a spousal surcharge.
  • 926 dependents/retirees did not complete or only partially completed the audit’s requirements.
Audit Benefits:

The client decided to terminate coverage immediately for 1,189 dependents/retirees (10.32% of total) and began applying a spousal surcharge for the 108 dependents.
 
A customized list of best practices and recommendations was also provided to the client at the end of the audit to reduce the chance of providing benefits for ineligible dependents or retirees in the future.
 
First Year Savings Calculations

Average annual cost per dependent/retiree:
                                  $3,500
Annual savings:
                                  $4,161,500
Return on Investment:
                                  3,187%