Dependent eligibility stands as a pivotal subcomponent within the broader eligibility process of any health plan. Given that dependents are typically not employees of the plan sponsor, meticulous gathering of key demographic and relevant information is paramount during the enrollment process.
To strengthen the integrity of dependent eligibility, it is advisable for the plan administrator to procure supporting documentation before adding a dependent to the plan. This proactive measure not only expedites the enrollment process but also establishes an audit trail, offering robust support for a dependent’s eligibility status if a review becomes necessary down the line. Recognizing that a dependent’s eligibility is contingent upon the primary employee, it becomes imperative to institute efficient processes and controls for the accurate and timely removal of dependents who are no longer eligible to participate.
Certain life events that alter dependent eligibility, such as divorce, changes in disability status, or death, may go unnoticed unless reported by the employee. Consequently, plan administrators should periodically assess the dependent status of individuals currently enrolled in the plan.
Methods of Evaluation
- Full Audit: Recertifies the eligibility status of all dependents, requiring employees to submit documentation determined necessary by the plan sponsor for verification.
- Targeted Audit: Similar to a full audit but focuses on specific groups of dependents.
- Affidavit Evaluation: Requires employees to reaffirm, under penalty of perjury, the eligibility status of their dependents without submitting additional documentation.
In each evaluation method, employees must adhere to specified process requirements within a defined timeframe. Failure to submit requested information or comply within the given timeframe results in the removal of the dependent from eligibility roles.
External consultants conducting these evaluations report an average ineligibility rate of 3%-9% among enrolled dependents due to non-compliance with health plan requirements. Considering the plan’s size, complexity, and existing eligibility controls, a recommended frequency for conducting dependent evaluations is every 3 to 5 years.
Ensuring Dependent Eligibility in Your Health Plan
Dependent eligibility is a crucial aspect of maintaining the integrity of any health plan. To safeguard your plan and ensure compliance, it is essential to implement thorough evaluation processes. Plan administrators should proactively gather and verify supporting documentation for dependents during the enrollment process. Instituting periodic evaluations, such as full audits, targeted audits, or affidavit evaluations, can help identify ineligible dependents and maintain the accuracy of your records.
To strengthen your health plan’s dependents’ eligibility, take the following actions:
- Implement Robust Documentation Processes: Ensure that all dependents provide necessary documentation before enrollment. This will expedite the process and create a reliable audit trail.
- Conduct Regular Dependent Evaluations: Depending on your plan's size and complexity, schedule full audits, targeted audits, or affidavit evaluations every 3 to 5 years. These evaluations help maintain compliance and identify ineligible dependents.
- Monitor Life Events: Stay vigilant about changes in dependent eligibility due to life events such as divorce, disability status changes, or death. Regularly update and verify dependent information to reflect these changes accurately.
- Engage External Consultants: Consider hiring external consultants to conduct evaluations. Their expertise can help uncover ineligible dependents, ensuring your plan's integrity and compliance.
By taking these steps, you can enhance the integrity of your health plan, ensure compliance, and provide continuous support for your employees and their eligible dependents.
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To discuss our service offerings and how Withum can help, contact a member of our Self-Insured Health Plan Advisory Services Team.
