Dependent Eligibility Audit for Benefit Plans

[Guest VP Client Services]

At renewal we want to do an audit to verify that covered members are still legally married and that their dependent children still meet the insurance company's definition of an eligible dependent.

Does anyone have a sample form to do an audit of eligibility for benefit plans?

[Guest ctopher]

At renewal we want to do an audit to verify that covered members are still legally married and that their dependent children still meet the insurance company's definition of an eligible dependent.

Does anyone have a sample form to do an audit of eligibility for benefit plans?

It has been our experience that performing a dependent eligibility audit can be a very financially rewarding project, but folks often underestimate the amount of effort required. Just having the participants fill out a form (essentially amounting to an affidavit) does not produce that great a result. After all, they signed their enrollment forms saying that everything was true and accurate, there isn't much motivation to change their story now. Full audits on the other hand have been known to generate reductions in dependent counts as high as 18%. The lowest percentage I personally have heard of was around 4%.

To perform an end to end audit you need to break your plan documents down into specific types of dependents (legal spouse, underage biological child, step child, adopted child, grandchild, QMCSO, etc...) and determine what are the different sets of documentation you will accept as proof of that dependent's current status. For example: To verify a legal spouse you will most likely want proof of marriage (marriage license or certificate, depending on where the marriage occurred) and something proving they are still married, like a current joint filed tax return. The consistent theme for all dependents, regardless of type, should be to collect documents that establish the dependent relationship as well as documents that show the relationship is still in existence.

Operationally there is a lot to do with one of these audits. Employee communication is critical to prevent backlash. Document collection, secure storage, and final document destruction should be of paramount concern due to privacy issues. At a minimum an inbound call group needs to be established to help answer employee questions and provide instruction on where to find documents if they are not currently in their possession. Determination of eligibility from the documents can range from simple to complicated, and requires very consistent processing. My recommendation is to outsource the entire project to a vendor. There are a number of them out there who perform this kind of service, with varying degrees of sophistication in their approach. Some will even perform this service ongoing for new enrollments and on a recurring basis for existing dependents.

Sorry for the long, rambling reply, but I wanted to try and paint a pretty accurate picture. I am a big proponent of these audits and personally believe that providing proof of eligibility will become a common practice across most health plans in the next few years. I can point you in some resource direction if you want further information.

[Guest b2kates]

I endorse heartily the comments of Ctopher.

Having conducted such audits as part of compliance review, they are more intense then anticipated. We unfortunately had many upset participants as a result of "student" children not continuing to qualify under the terms of the plan.

Further we ended up maintaining more documents than were initially anticipated.

Good luck!

[alexa]

At renewal we want to do an audit to verify that covered members are still legally married and that their dependent children still meet the insurance company's definition of an eligible dependent.

Does anyone have a sample form to do an audit of eligibility for benefit plans?

It has been our experience that performing a dependent eligibility audit can be a very financially rewarding project, but folks often underestimate the amount of effort required. Just having the participants fill out a form (essentially amounting to an affidavit) does not produce that great a result. After all, they signed their enrollment forms saying that everything was true and accurate, there isn't much motivation to change their story now. Full audits on the other hand have been known to generate reductions in dependent counts as high as 18%. The lowest percentage I personally have heard of was around 4%.

To perform an end to end audit you need to break your plan documents down into specific types of dependents (legal spouse, underage biological child, step child, adopted child, grandchild, QMCSO, etc...) and determine what are the different sets of documentation you will accept as proof of that dependent's current status. For example: To verify a legal spouse you will most likely want proof of marriage (marriage license or certificate, depending on where the marriage occurred) and something proving they are still married, like a current joint filed tax return. The consistent theme for all dependents, regardless of type, should be to collect documents that establish the dependent relationship as well as documents that show the relationship is still in existence.

Operationally there is a lot to do with one of these audits. Employee communication is critical to prevent backlash. Document collection, secure storage, and final document destruction should be of paramount concern due to privacy issues. At a minimum an inbound call group needs to be established to help answer employee questions and provide instruction on where to find documents if they are not currently in their possession. Determination of eligibility from the documents can range from simple to complicated, and requires very consistent processing. My recommendation is to outsource the entire project to a vendor. There are a number of them out there who perform this kind of service, with varying degrees of sophistication in their approach. Some will even perform this service ongoing for new enrollments and on a recurring basis for existing dependents.

Sorry for the long, rambling reply, but I wanted to try and paint a pretty accurate picture. I am a big proponent of these audits and personally believe that providing proof of eligibility will become a common practice across most health plans in the next few years. I can point you in some resource direction if you want further information.

[alexa]

At renewal we want to do an audit to verify that covered members are still legally married and that their dependent children still meet the insurance company's definition of an eligible dependent.

Does anyone have a sample form to do an audit of eligibility for benefit plans?

It has been our experience that performing a dependent eligibility audit can be a very financially rewarding project, but folks often underestimate the amount of effort required. Just having the participants fill out a form (essentially amounting to an affidavit) does not produce that great a result. After all, they signed their enrollment forms saying that everything was true and accurate, there isn't much motivation to change their story now. Full audits on the other hand have been known to generate reductions in dependent counts as high as 18%. The lowest percentage I personally have heard of was around 4%.

To perform an end to end audit you need to break your plan documents down into specific types of dependents (legal spouse, underage biological child, step child, adopted child, grandchild, QMCSO, etc...) and determine what are the different sets of documentation you will accept as proof of that dependent's current status. For example: To verify a legal spouse you will most likely want proof of marriage (marriage license or certificate, depending on where the marriage occurred) and something proving they are still married, like a current joint filed tax return. The consistent theme for all dependents, regardless of type, should be to collect documents that establish the dependent relationship as well as documents that show the relationship is still in existence.

Operationally there is a lot to do with one of these audits. Employee communication is critical to prevent backlash. Document collection, secure storage, and final document destruction should be of paramount concern due to privacy issues. At a minimum an inbound call group needs to be established to help answer employee questions and provide instruction on where to find documents if they are not currently in their possession. Determination of eligibility from the documents can range from simple to complicated, and requires very consistent processing. My recommendation is to outsource the entire project to a vendor. There are a number of them out there who perform this kind of service, with varying degrees of sophistication in their approach. Some will even perform this service ongoing for new enrollments and on a recurring basis for existing dependents.

Sorry for the long, rambling reply, but I wanted to try and paint a pretty accurate picture. I am a big proponent of these audits and personally believe that providing proof of eligibility will become a common practice across most health plans in the next few years.

I can point you in some resource direction if you want further information.

Would you please provide some good resources that provide this service. I have actually doen 1 of these in-house in the past with a much smaller org but am lookinbg to outsource this this yeat Thx

[Guest ctopher]

Would you please provide some good resources that provide this service. I have actually doen 1 of these in-house in the past with a much smaller org but am lookinbg to outsource this this yeat Thx

Alexa,

Check out www.plan-smart.com. In the interests of disclosure this is my organizations website.

Chris

[Guest Benefit Audit Consultant]

As you are considering a dependent eligibility audit, make sure and pay attention to existing state law and the new legislation called "Michelle's Law". “Michelle’s Law” will go into effect in October of 2009. This law prevents a group health plan from removing coverage from a “dependent child” due to a “medically necessary leave of absence” before the earlier of: (1) one year after the first day of the medically necessary leave of absence; or (2) the date on which the coverage under the plan would otherwise terminate.

You can read more about it here: Michelle's Law: A New Consideration for Dependent Audits

If you would like to learn more about dependent eligibility audits you can take a look at The Dependent Audit Guide.

The Dependent Audit Guide is the most comprehensive information on Dependent Eligibility Audits on the web. This guide is free to access and is meant to serve as an educational resource for anyone interested in learning more about a Dependent Eligibility Audit.

[Guest tmaggio]

We have a process that is more complex than one form but a complete process that also has software where you can do the audit within your company or use your claims administrator or one of our network claims administrators. Please go to www.maggiosolutions.com and sign up for a webinar that will give you all of what you need to do an audit.

The software is only about $6,000 for one company audit and you will receive a very healthy return on your investment, depending on how many employees with dependents and how much you contribute towards the dependent costs. TM