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June 3, 2013

Periodic Dependent Eligibility Audit Achieves High ROI

Business Situation:
After a dependent eligibility audit and throughout the year there are circumstances where new dependents may be added to benefit plans. These can include life events, new hires, open enrollment, and acquisitions. After an initial dependent eligibility audit many employers, like the one highlighted below, choose an ongoing dependent eligibility audit to maintain accurate enrollment records and ensure only those dependents that are eligible remain on their health plans.

Client Profile:
  • Construction company
  • 800 employees covering 1,800 total dependents

Audit Finding:
Initial Dependent Eligibility Audit:  94 dependents (5.22% of total at that time) failed to satisfy the plan’s eligibility criteria.  Many of those who failed were divorced, but did not previously report it.

Ongoing Dependent Eligibility Audit:  68 dependents (15.93% of total at that time) failed to satisfy the plan’s eligibility criteria.  Many of those who failed were spouses who were not legally married or were dependents under age 26 with no confirmed relationship to the employee.

Audit Benefits:

Initial Dependent Eligibility Audit:  The client terminated coverage for 94 dependents (5.22 % of total).  Given that the employer’s average dependent cost the plan $2,823 per dependent per year; our client obtained a minimum first year savings amount of more than $260,000 for a return of investment ratio of a little over 1,700%.

Ongoing Dependent Eligibility Audit:  The client terminated coverage for 68 dependents (15.93 % of total).  Given that the employer’s average dependent now costs the plan $3,610 per dependent per year; our client obtained a minimum first year savings amount of more than $240,000 for a return of investment ratio of a little over 5,000%.