Lorem ipsum dolor sit amet, consectetur adipiscing elit. Vivamus convallis sem tellus, vitae egestas felis vestibule ut.

Error message details.

Reuse Permissions

Request permission to republish or redistribute SHRM content and materials.

Stop Misuse of Family Benefits

Some workers intentionally abuse family-perk policies, while others are just confused

A man in a blue shirt is holding his back against a white background.

United Airlines fired more than 35 employees in March for selling travel passes intended for employees' immediate relatives. Free or discounted travel is a common family perk in the airline industry, the Chicago Tribune reported. When selling these passes, sometimes for several thousand dollars apiece, employees falsely registered the buyers as their stepparents or domestic partners.

"The rules are there to make sure everyone can enjoy the benefits," said Danielle Capilla, Chicago-based director of employee benefits compliance at Alera Group, an insurance and financial services firm. Her father, an airline pilot, made sure everyone in her family understood those rules.

Whether misusing travel perks, allowing relatives to drive a company car or extending discounts to people who aren't eligible for them, those who violate family-perk policies "think they're not going to get caught," Capilla said.

"Abuse of employee benefits and perks is a continuous frustration for employers," added Bobbi Kloss, HR leader at Benefit Advisors Network, a Cleveland-based consortium of health and welfare benefit brokers. "From the CEO and top executives to the line workers, no level of employee is immune from committing abuses."

Dependent-Eligibility Audits

A common misuse of family benefits occurs when employees add ineligible relations as family members under their employer's health plan. To combat this practice, 43 percent of employers routinely conduct dependent-eligibility audits of their health plans, according to a recent report from the nonprofit International Foundation of Employee Benefit Plans. When conducting an audit, HR consultancy Mercer estimates that most companies will find 3 percent to 10 percent of plan members to be ineligible. Given that the average annual cost of each covered dependent is $4,570, Mercer found, the expense of covering ineligible dependents can add up quickly.

Capilla encourages employers to conduct dependent audits "every year if there have been issues, and at least every three years otherwise."

"Not all misuse is intentional," said Anna Phalen, vice president of account management at Jellyvision, a benefits communication software firm in Chicago. "In some cases, employees may not know they're stepping over the line, or they may not be aware there are penalties for doing so."

One reason workers grow confused over dependent eligibility, Phalen noted, is that the Affordable Care Act allows adult children up to age 26 to stay on a parent's employer-provided health plan, whether they are dependents or not. Also, in recent years, many benefit plans have expanded their definition of eligible dependents to include unmarried partners and stepchildren. These developments, she said,  "make it all the more important to clearly articulate the rules on who qualifies."

Family Leave Misuse

Misuse of time off is also costly for employers, especially for intermittent absences taken under the Family and Medical Leave Act (FMLA) by employees who don't actually need to attend to their own or a relative's health needs.

"You can't solve for every misuse of leave. But you can design your leave program and policies to help deter misuse," Capilla said. How employers go about that depends on the problems they're seeing, she said, joking about the "30 percent of the workforce seeking intermittent FMLA on every sunny Friday" who are no taking an infirm parent for dialysis.

[SHRM members-only toolkit: Managing Family and Medical Leave]

Clarify What's Allowed

Employees may have been told about benefits restrictions when they were hired or went through open enrollment, Phalen said, but that information should be reiterated when they make changes to their benefits, such as adding dependents to a family health plan.

When employees receive a thick handbook during onboarding that's filled with benefits jargon, "it can be overwhelming," said Bill Gimbel, president of LaSalle Benefits, an insurance brokerage in the Chicago area. Employers should describe their benefits rules "in terms that are simple enough for all employees to understand, yet thorough," he said. "A detailed handbook may be helpful for your HR team, but a PowerPoint or visual one-sheeter that provides an overview of your benefits offerings may be better for the rest of your employees."

Taking Action

Intentional abuse of employer benefits can be a firing offense, and, in some cases, employers may want to sue to reclaim the value of misappropriated benefits or press criminal charges.

However, "for abuses, I advise having a 'strike' system," Capilla said, as in two or three strikes and you're out. "There are honest mistakes that happen. At the same time, you don't want to swing to the other end and only slap people on the wrist."

"No matter what is done to tighten the reins, as long as there are unethical people in the workplace, abuse will continue," Kloss said. Many employers "jump the gun and discontinue the benefit or perk, affecting all employees instead of addressing the behavior of the abuser," she added. That can lead to employee morale issues, especially when a discontinued benefit made the job particularly attractive.

To reduce benefits fraud, employee benefits professionals recommend these steps:

  • Work with managers. "Lack of well-being—financial, social, emotional and physical wellness—could be driving employees to make bad choices," Kloss said. Managers may be able to pick up on those situations. Train your managers to identify signs of misuse, Gimbel added. "Educate them on what to look for, and be sure that they report it back to HR."
  • Use HR software. If you have more than 20 employees, HR software can automate and monitor benefit processes "and it doesn’t have to break the bank—many vendors allow you pick and choose what you need to tailor your software suite to your company’s needs," Gimbel said. When choosing software, he recommended "identifying your top needs and pain points, then start researching different options. There are also some pre-built templates, like this PTO Google template, that can help streamline your current process."
  • Stay organized and be proactive. Regularly track and monitor benefits use, whether through spreadsheets, online forms or HR information systems, Gimbel advised. "If, along the way, your team catches wind of potential benefits misuse, be proactive and address it immediately."


​An organization run by AI is not a futuristic concept. Such technology is already a part of many workplaces and will continue to shape the labor market and HR. Here's how employers and employees can successfully manage generative AI and other AI-powered systems.