Verification Reveals Ineligible Spouses

Business Situation & Client Profile

A manufacturer wanted to verify whether any of their 113 employees were covering a spouse with benefits available to them through their own employer. If so, the spouse would be ineligible for the manufacturer’s health plan due to the “working spousal carve out” plan provision. 

Solution

BMI customized an audit plan to meet the following objectives:

• Communicate the purpose of the audit, deadlines, compliance requirements, etc. to 113 employees with 83 enrolled spouses and 146 dependent children.

• 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

• 23 dependents (10% of total) failed to meet plan eligibility requirements.

• 16 of the 23 dependents (70% of total) were spouses eligible for coverage through their own employer.

• 9 additional spouses did not provide complete verification information or failed to respond.

Audit Outcome

The client terminated coverage for 23 dependents who were identified by the audit to be ineligible. Coverage was also terminated for the 22 additional dependents who failed to respond or verify eligibility despite multiple communications prior to the audit’s submission deadline.

First Year Savings Calculations

•  Average Annual Cost per Dependent: $5,000

•  Calculated Annual Savings from Dependents Removed: $225,000

•  Return on Investment: 2,922%