Dependent Audit Highlights Importance of Frequent Verification

Business Situation & Client Profile

A large regional hospital with 1,200+ employees engaged BMI Audit Services to perform dependent eligibility verification to verify whether 2,643 enrolled dependents were eligible for benefits under the plan’s rules. The organization had not conducted a dependent verification audit in over five years, creating exposure to compliance risks and unnecessary benefit costs. 

Solution

BMI developed and implemented a tailored dependent verification plan with the following components: 

• Communicated the audit purpose, compliance deadlines, and documentation requirements to 1,258 enrolled employees with 1,012 spouses and 1,631 dependent children. 

• Provided toll-free access to a bilingual customer service team to support employees throughout the process. 

• Compared each dependent’s submitted documentation against plan eligibility requirements. 

• Identified dependents enrolled in coverage who did not meet those requirements. 

• Utilized a secure system to collect and store all verification documents. 

• Delivered regular audit updates and a final executive summary report for leadership. 

Audit Findings

The dependent verification revealed key compliance and eligibility differences: 

• 32 dependents did not meet eligibility criteria. 

• Common causes included: 

  • Employees voluntarily requesting removal 

  • Unreported divorces 

  • Dependents on full-time active military service 

• 127 dependents failed to submit complete documentation or did not respond to outreach. 

• Overall, 6.02% of the total dependent population failed to meet eligibility requirements. 

Audit Outcome: Benefits Cost Reduction and Risk Mitigation

As a result of the audit: 

• The hospital removed 159 ineligible or unverified dependents from the health plan. 

• This action significantly reduced unnecessary benefit spending and improved plan integrity and compliance. 

Conclusion 

This Dependent Eligibility Verification delivered more than just compliance, it provided substantial financial benefits. By identifying and removing ineligible or unverified dependents, the client achieved: 

• Average Annual Cost per Dependent: $5,000 

• Total First-Year Savings: $795,000 

• Return on Investment (ROI): 3,015% 

Ongoing Verification not only reduces unnecessary healthcare spending but also strengthens plan integrity, supports fiduciary responsibility, and creates long-term savings for employers and plan sponsors.