Enrollment times can be hectic, and it’s easy to forget there are steps you can take to manage costs and maintain compliance with federal law. One of those steps is a Dependent Verification Review.
Why add this process during enrollment?
“Most companies will find 3% to 10% of plan members to be ineligible as the result of a dependent audit.”* Covering ineligible dependents may mean you are spending money on people you don't intend to cover. Additionally, employees who cover ineligible dependents may be at risk for bearing the total cost of healthcare claims for these dependents.
Given that the average cost of a dependent policy can run $4,570 annually, the savings from a dependent audit can add up quickly. *
Complying with Federal Law
The Patient Protection and Affordable Care Act (ACA) has a rule limiting group health plan cancellations. For plan years beginning on or after September 23, 2010, plans may not retroactively terminate coverage except in limited circumstances. Therefore, it is especially important to be diligent about ensuring the plan is only covering individuals for whom you intended to provide benefits. Once a non-qualified individual enrolled in the plan has incurred a qualified claim, the plan will likely be required to pay for it.
Benefits of a Dependent Verification Review for Employers
For many employers, an attractive feature of an eligibility review is retaining a stronger pool of covered employees when negotiating alternative/new coverage. Other benefits may include:
- Reducing risk and saving more on employer medical coverage by removing ineligible dependents
- Helping ensure you meet carrier eligibility requirements
- Updating Social Security Numbers for dependents to help complete ACA reporting
- Updating employee information including emergency contacts and beneficiaries
- Educating employees about benefit changes, which could boost overall plan participation
Reducing Risk for Employees
While a Dependent Verification Review can help prevent employees from paying premiums for dependents who are ineligible, it may also protect them financially in other ways. An employee may find themselves required to repay either their employer or healthcare provider if a claim for an ineligible dependent is discovered.
What to Expect
You should let your employees know before enrollment that you’ll be conducting a Dependent Verification Review so they can prepare. When you use American Fidelity as your benefits provider, we will provide communications materials to explain eligibility guidelines, required documentation, and FAQs to help prepare employees for their review.
During the enrollment, our salaried account managers will conduct one-on-one benefit reviews with all eligible employees to inspect all verification documents and obtain a signed Dependent Eligibility Form from every benefit-eligible employee. After enrollment, American Fidelity will supply reports back to the employer with the status of each benefit-eligible employee.
To learn more about Dependent Verification Reviews, please visit americanfidelity.com/DVR.
*TriNet: Employers, Here is Why Your Benefits Plan Needs a Dependent Eligibility Audit; May 16, 2017