Removal of Ineligible Dependents Saves Organization Thousands of Dollars

Business Situation

As one of many efforts to reduce overall health care costs, this client engaged BMI to conduct an audit of 1,033 enrolled dependents in medical, dental and vision plans in order to verify eligibility. 

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.

  • Examine 100% of all eligibility records to identify enrolled 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.

  • Securely collect and retain all verification documentation used to confirm eligibility.

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

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

Audit Finding

  • 89 dependents (12.36% of total) failed to meet plan eligibility requirements.

  • Reasons for ineligibility included voluntary removal, overage dependents or dependents in dental coverage unable to be claimed as a dependent under U.S. Internal Revenue Code specified by the plan. (Note: Under ACA dependent eligibility rules for dental coverage may include provisions that are more restrictive than for medical coverage)

Audit Outcome

The client terminated coverage immediately for the 89 dependents who were identified by the audit to be ineligible.  Additionally, coverage was terminated for another 8 dependents who did not respond completely prior to the audit’s deadline despite multiple communications.

First Year Savings Calculations

Average Annual Cost per Dependent: $3,500 Estimated Annual Savings: $339,500 Return on Investment: 2,751%

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