Dependent Eligibility Verification Audit: $763K in Savings for a Food & Beverage Employer

A food and beverage retailer with 709 employees engaged BMI Audit Services to conduct a dependent verification audit and spousal surcharge review. The goal was to confirm whether any of the 1,383 enrolled dependents—including spouses and children—met the plan’s eligibility and surcharge criteria. 

Solution 

BMI Audit Services developed a customized dependent verification strategy with the following objectives: 

  • Communicate the purpose of the audit, deadlines, and compliance requirements, to 709 employees with 464 enrolled spouses and 919 dependent children. 

  • Provide access to a customer service department with toll-free phone lines and bilingual staff for member support. 

  • Compare plan eligibility requirements with documentation submitted by members. 

  • Identify all ineligible dependents currently enrolled who did not meet plan eligibility criteria. 

  • Securely collect and retain all dependent verification documentation. 

  • Report findings and provide a final executive summary of results. 

Audit Findings 

The dependent eligibility audit identified substantial areas of non-compliance: 

  • 28 dependents (2.02% of total) failed to meet plan eligibility requirements. 

  • 23 dependents (1.66% of total) were identified as requiring a spousal surcharge. 

  • 121 additional dependents did not provide complete verification information or failed to respond. 

  • Overall fail rate of 12.86%. 

Audit Outcome 

The client terminated coverage for all ineligible dependents and those who failed to respond or verify eligibility prior to the audit deadline. A spousal surcharge was also applied to the 23 dependents previously exempt from this cost-sharing requirement. 

First Year Savings Calculations 

  • Average Annual Cost per Dependent: $5,000 

  • Annual Savings from Removing Ineligible Dependents: $745,000 

  • Annual Savings from Spousal Surcharge Enforcement: $18,850 

  • Return on Investment (ROI): 3,908.16% 

Conclusion 

This case demonstrates the measurable financial and compliance benefits of conducting a dependent verification audit. By removing ineligible dependents and enforcing spousal surcharge verification, the employer achieved more than $763,000 in annual savings and a ROI exceeding 3,900%. For brokers and plan sponsors, dependent eligibility audits remain one of the most effective cost-containment strategies, ensuring benefit plans are compliant, equitable, and financially sustainable. 

Spousal Surcharge, Dependent EligibilityRobert Temples