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March 3, 2016

Investing in a Dependent Eligibility Audit Produces Big Returns

Business Situation:
This client provides a comprehensive medical benefits package to employees and their families, but wished to avoid payment of claims for ineligible dependents. To accomplish this, the client hired BMI to conduct a dependent eligibility audit. 
Client Profile:

  • Retailer
  • 331 Employees Covering 742 Dependents
 Audit Finding:
The client achieved a 96% response rate to the verification mailing campaign which resulted in:
  • 31 dependents (4.18% of total) failing to meet plan eligibility requirements.
  • Reasons for ineligibility included lack of documentation of legal custody, unreported divorces, eligibility for other coverage through other employment, and voluntary removal of ineligible dependents.
 Audit Benefits:
The client decided to terminate coverage immediately for the 31 dependents who were identified by the audit to be ineligible.  Additionally, coverage for 49 dependents who did not respond completely prior to the audit deadline or extended deadlines was terminated.
First Year Savings Calculations

Average Annual Cost per Dependent:
                                  $3,500
Estimated Annual Savings:
                                  $280,000
Return on Investment:
                                  2,800%