Dependent Verification – An Effective Cost Containment Strategy

Business Situation & Client Profile

To help combat rising health insurance costs, the internal audit department of a global engineering and manufacturing company engaged BMI to verify whether 511 enrolled dependents were eligible for the company’s medical and dental health plans.

Solution

BMI customized an audit plan to meet the following objectives:

  • Communicate the purpose of the audit, deadlines, compliance requirements, etc. to all employees with one or more dependents.

  • Provide a customer service department with toll-free phone lines and bilingual staff.

  • Compare plan eligibility requirements with documentation submitted.

  • Identify all dependents currently enrolled who do not meet eligibility criteria.

  • Securely collect and retain all verification documentation.

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

Audit Findings

  • A 100% participation rate

  • 55 dependents (10.76% of total) failed to meet plan eligibility requirements.

  • Reasons for ineligibility included eligibility for coverage through the dependent’s own employer but did not enroll and voluntary withdrawal upon receipt of existing eligibility information.

Audit Outcome

The client terminated coverage for 55 dependents who were identified by the audit to be ineligible.  Coverage was also terminated for 17 additional dependents who provided incomplete information despite multiple communications prior to the deadline.

First Year Savings Calculations

  • Average Annual Cost per Dependent: $300-$4,000

  • Calculated Annual Savings from Dependents Removed: $280,600

  • Return on Investment: 2,613%

Use our savings calculator to see how much your company can save.

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