Dependen
t Eligibility Audits
A plan sponsor spends an average of $4,000 to $5,000 per dependent enrolled in its benefit plan. The Wall Street Journal recently estimated that 10% to 15% of enrolled dependents do not qualify for coverage. These include employees who are divorced, but continue to carry their former spouses on the plan, employees who enroll a “spouse” on the plan when they are not legally married, children listed as dependents that have no legal relationship to the employee and dependents over the age of 19 who do not have full time student status. Allowing ineligible dependents to utilize your plan assets is a financial drain and may represent a risk for non-compliance.
• Sarbanes-Oxley Compliance: Public companies must have financial controls in place. Failure to implement effective controls that prevent enrollment of ineligible dependents may create a Sarbanes-Oxley exposure.
• Exclusive Benefit Rule for Fiduciaries:
Having ineligible dependents on your health plan violates the ERISA mandate requiring health plan dollars to be spent only in the interest of eligible plan participants and beneficiaries. There may be personal liability exposure for a benefit plan custodian who knowingly pays claims for ineligible dependents and/or fails to have procedures in place in order to insure maximum accuracy.
MedReview’s clients may select either a fixed fee or a contingency fee. Utilizing the contingency fee option eliminates the client’s financial risk.
The MedReview Dependent Eligibility Documentation Audit provides the plan sponsor with legal documentation that insures all dependents are qualified to participate in the plan. It requires that employees submit legal documentation proving that each dependent they have enrolled in the plan is qualified to participate.
The following categories of documentation are required: 1040 Tax Form; Marriage Certificate; Govt. issued ID for spouse (usually a driver’s license); Birth Certificates for all minors or Adoption Papers or Court Issued Custody Papers if the minor is not a natural child of the employee; full or part time Student Verification for dependents over the age of 19.
MedReview works with the client to explain the process and purpose of the audit in detail to the employees so that they do not feel that they are being accused of wrongdoing. Communications with employees emphasize that the audit reduces the cost of the plan which enables the client to provide better benefits for its employees.