Relationships can shift. Family structures can change. Yet what happens when those new alignments do not align with the listing of eligible dependents on a benefits policy? Problems. Most of them financial.
Employers are continuously looking for ways to better control medical costs, and one option includes ensuring that everyone listed on the health plan is actually still eligible to receive those benefits. A dependent eligibility audit can take care of this.
While a major advantage to performing such an audit is to hold down costs, another comes via the fact that plan administrators have a fiduciary duty to administer the plan in accordance with the plan documents, which means that only eligible dependents should receive benefits. It may even be possible to recover amounts already paid.
When an employee and his or her spouse have recently divorced, for example, the spouse is no longer eligible for benefits – a fact that can often get overlooked. Most employees who add an ineligible dependent do so unwittingly, through a lack of understanding of what defines an eligible dependent. Nieces, nephews, and siblings fall into the category of ineligible dependents.
It remains the employer’s responsibility to clearly define eligible dependents, and to make sure that definition is applied among all contracts and the benefits plan document. Employers should ensure that dependents of new employees are eligible as they are added to the plan.
Some employees may view audits negatively, assuming that their employer is trying to kick some people off of the plan. The reality, however, is that dependent eligibility audits help employers do what’s best for the plan in the long-term – increasing coverage and controlling the cost of premiums for everyone.
The benefits team at The Reschini Group can offer insight and guidance on dependent eligibility audits and other benefits-related subjects.
Copyright 2018 The Reschini Group
The Reschini Group provides these updates for information only, and does not provide legal advice. To make decisions regarding insurance matters, please consult directly with a licensed insurance professional or firm.