Health Plan Eligibility Audits: Verifying Who Is Covered

More than a quarter of firms now use eligibility audits

By Stephen Miller Mar 2, 2009

Employer-provided health care plans are a prized benefit among employees and a costly benefit for employers. Continually rising health care costs have caused many employers to re-examine their plans, looking for money-saving options.

With cost-savings in mind, more employers are conducting dependent eligibility audits to determine who is covered under their plan. A survey conducted by the not-for-profit International Foundation of Employee Benefit Plans finds that 26 percent of U.S. employers conduct eligibility audits for their health care plans.

“Employers conduct an eligibility audit to ensure that every person covered by their health plan is an approved dependent,” says Julie Stich, senior information/research specialist with the foundation. “When the audit is conducted, employers often discover many people — former spouses, adult children, non-immediate family members — who are covered under the health plan even though they do not qualify as a dependent.

“Removing ineligible dependents from the plan can ultimately save the employer hundreds of thousands of dollars and, given the current economy, I expect the percentage of employers conducting eligibility audits to grow,” says Stich. “In the past, some employers may have hesitated to conduct an audit because of the possibility of their employees’ negative reactions. With the current financial situation, however, cost-saving will likely be the employers’ main concern.”

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In the past, some employers might have hesitated
to conduct an audit because of the possibility of
their employees’ negative reactions.

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To learn more about conducting eligibility audits, see the SHRM Online article Tips for Auditing Dependent Eligibility.

Other Measures

Survey results reported in the foundation's Employee Benefits Survey: U.S. and Canada 2009 indicate that employers are working to keep their health care costs in check by using a number of cost management techniques. The most popular methods reported by the survey respondents were:

Higher deductibles, co-insurance or co-pays (74 percent).

Annual or lifetime maximum benefits limits (56 percent).

Requiring prior authorization for certain services (55 percent).

Health care claims/utilization analysis (39 percent).

Health care claims audits (26 percent).

Opt-out incentives (15 percent).

Predictive modeling, a strategy that uses claims data and lifestyle analytics to identify potential catastrophic claims and disease states, is used by 12 percent of survey respondents.

Voluntary Benefits

Another cost-saving option considered by employers is voluntary (employee-pay-all) benefits, which are group benefits offered at the workplace but paid for by employees. These benefits are used to expand benefit options without increasing costs to employers. Voluntary benefits might include coverage supplemental to the employer’s current offerings. For employers unable to provide health care coverage, they might include standard health insurance.

The survey found that 39 percent of employers have voluntary health insurance, 40 percent offer voluntary dental insurance and 37 percent have voluntary vision insurance.

“Voluntary benefits can be a great option for employers with tight budgets who still want to help their employees obtain health care coverage or other types of insurance,” says Stich. “Because group insurance premiums are typically less expensive than the premiums for an individual policy, offering voluntary benefits at the workplace can help employees who want the coverage but also need help making ends meet.”

Drug Costs

Employers are implementing a number of cost-management techniques for prescription drugs. The most popular techniques respondents were incorporating into their plans:

A mail-order drug service (85 percent).

Promotion of generic drugs (71 percent).

Drug formularies (68 percent).

Three or more tiers for cost-sharing (59 percent).

A pharmacy benefit manager (50 percent).

The survey was conducted toward the end of 2008 among a broad cross-section of U.S. and Canadian employers.

Stephen Milleris an online editor/manager for SHRM.

Related Articles:

Health Care Savings with Dependent Eligibility Audits, SHRM Online Benefits Discipline, April 2009

Tips for Auditing Dependent Eligibility, SHRM Online Benefits Discipline, February 2009

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