Removal of Ineligible Dependents Saves Thousands

Business Situation & Client Profile

To help combat rising health insurance costs, this food manufacturer and their employee benefit broker engaged BMI to verify whether or not the 1,475 enrolled dependents were eligible for health plan benefits.

 

Solution

BMI customized an audit plan to meet the following goals:

  • 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 Finding

  • 96% of audit participants completed the audit.

  • 33 dependents (2.24% of total) failed to meet plan eligibility requirements.

    • Reasons for ineligibility included relationships not covered by the plan, unreported divorces and unmarried spouses.

 

Audit Outcome

The client terminated coverage for the 33 dependents who were identified by the audit to be ineligible.  Coverage was also terminated for 100 additional dependents who did not respond completely to verify eligibility prior to the audit’s deadline despite multiple communications.

 

First Year Savings Calculations

Average Annual Cost per Dependent: $3,500

Calculated Annual Savings from Dependents Removed: $465,500

Return on Investment: 2,528%

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