Why outsource dependent verification?

Dependent verification audits are outsourced for a couple of reasons. Firstly, managing dependent eligibility in-house is challenging and time-consuming. Without access to proper technology, verifying eligibility would be an administrative nightmare for already overworked HR teams. 

Secondly, audits can lead to difficult conversations about loved ones losing coverage. Outsourcing dependent verification helps protect the employer-employee relationship by including a neutral third-party that keeps things fair and unbiased.

To verify eligibility, employees must provide a legal document to prove their relationship to the dependent. Supported documentation typically includes birth certificates, marriage certificates, and adoption certificates. Employees upload documentation into a portal within a given timeframe and the audit is conducted. If a dependent is deemed ineligible, the audit provider will alert the employee that their dependent will be removed from coverage.

Why should your clients consider dependent audits?

Health insurance enrollment is complicated, especially for employees. Employees often enroll dependents who don't qualify for plans simply because they don't understand the rules. For example, an employee might enroll their adult child who has aged out because they didn't realize 26 was the cutoff. Or, an employee fails to report a spousal divorce, allowing their ex-spouse to continue coverage.

Unfortunately, there are cases of employees that purposely enroll ineligible dependents as well. Although employers want to trust their teams, relying on the honor system alone leaves them exposed.

Regardless of the reason ineligible dependents are enrolled, this is something businesses must prevent to avoid overspending and legal issues.

Cutting costs

Dependent audits can realize significantly lower premium costs when ineligible dependents are removed from coverage. Employers also limit exposure to costs associated with an ineligible dependent experiencing serious illness and subsequent costly care. 

Regulatory compliance

Dependent audits keep employers in compliance with ERISA and Sarbanes Oxley Acts by ensuring only eligible dependents are enrolled in coverage.

Common concerns you'll hear about audits

Your clients may be hesitant to work with a dependent audit provider. Here are some common concerns you may hear from employers, and how to respond:

Employers may consider audits to be invasive

Employers may fear that their workforce will find audits to be invasive. In this case, you'll need to remind employers that as plan sponsors they have a fiduciary responsibility to adhere to the guidelines in the SPD.

Security concerns

Employers may be apprehensive about sending private information off to a third-party. Let them know that the platform employees will upload documentation to is safe and secure.

Concern about harming the employer-employee relationship

Employers may be worried about the difficult conversations that will be had if an ineligible dependent is removed from coverage. Make sure employers know that they aren't the ones who will facilitate that conversation. A trusted partner will report termination of coverage at the end of the audit. This protects the employer-employee relationship by having a third-party keep things unbiased.

Conclusion

Dependent audits stand as a crucial solution to provide your clients. Ineligible dependents could be silently draining your clients resources, and worse, setting them up for a slew of financial and legal problems from failing to verify eligibility. And remember — your clients rely on you to safeguard their benefits programs. So, dependent audits are an essential tool to have in your benefits arsenal.