Enrollment times can be hectic, and it’s easy to forget there are steps you can take during this time which can help you both manage costs and maintain compliance with federal law. One of those steps is a Dependent Verification Review. Why add this process to your enrollment time? Because, according to Government Finance Review, “…roughly 8 percent of dependents enrolled in health-care plans are ineligible for coverage.”* 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.
Ineligible dependents cost employers an average of roughly $3,500 a year per dependent.*
Complying with Federal Law
The Patient Protection and Affordable Care Act (ACA) has a rule limiting group health plan rescissions. 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 employers may retain a stronger pool of covered employees when negotiating alternative/new coverage. Some of the other benefits can include:
- Cost savings on employer medical coverage costs from eliminating non-qualified dependents
- Removing ineligible dependents, potentially reducing risk
- Helping ensure you meet carrier eligibility requirements
- Updating Social Security Numbers for dependents to help complete ACA reporting
- Updating important employee information including emergency contacts and beneficiaries
- An opportunity to communicate and educate employees about benefit changes
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 annual 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 at the end of the review back to the employer with the status of each benefit-eligible employee. Taking these steps to review your employees’ dependents can impact your overall coverage costs, and American Fidelity is happy to offer this service. We have been conducting Dependent Verification Reviews for more than 10 years and have a team of experienced account managers ready to assist your group throughout the process.
To learn more about Dependent Verification Reviews, contact your local American Fidelity account manager.
*Government Finance Review: Controlling Health-Care Costs With Dependent Eligibility Audits; June 2015.