I wanted to share this with you because it is a hot topic in the industry. While employers are trying to get their cost under control for their health insurance, employees tend to feel that it is ok to not tell if not asked about dependents. By them not taking off ineligible dependents it can increase the cost for the whole group. In some cases it is found that the spouses are now “ex-spouse” and children can even be married and covered elsewhere. If you want to get together to some up with a plan to “audit” your enrollment please let me know!…Susan Donnell Masak
Recently, a friend of mine called to tell me how disappointed he was in his corporation’s new risk manager. “Why?” I asked, fully aware that risk and benefits managers are always the finest of folks.
“He killed me at the drug store,” he replied. “My copay was $70 and it used to be only $35. That’s double!”
Now, I’m absolutely sure that my friend’s new colleague did not change the organization’s benefits plan in a vacuum so that he could surprise people at their neighborhood drug stores.
In this economy he was likely given a directive from his boss to cut a certain dollar amount or percentage from the cost of the organization’s health plan. Nowhere is the old saying, “The buck stops here,” more accurate than on the desk of the benefits manager. We’re no strangers to the often necessary task of sharing bad news with co-workers about cost increases or the denial of a nonmedically necessary treatment.
But those difficult decisions contribute to the survival of our companies. So, I recommend we embrace our gutsy gig, grow a thick skin and earn our hardcore reputations!
As we look at renewal every year with increasingly weary eyes, we rarely find anything that seems new or strategic. We’ve rolled out consumer-driven plans and have enjoyed some savings. We’re all used to raising copays and employees’ share of premiums. And we’ve become our organization’s wellness cheerleaders in the hope of preventing costly claims before they occur.
But this year, like a growing percentage of employers, I’m planning to look a little deeper into our group itself – maybe take a step back and kick the tires a bit. This year, it’s time consider a DEVA (dependent eligibility verification audit).
Statistics show that a large employer can save a significant amount of money in premiums by conducting a DEVA. A growing number of firms offer this service to employers.
The audit can be done in-house, but many employers outsource it due to staff limitations or to pass the “bad guy” torch to the contracted vendor who contacts the employees directly, requests and collects documentation, follows up and removes ineligible dependents from coverage.
According to one source, the cost of ineligible dependents on a plan can bump annual costs an extra 2% to 6% annually. Many employers have historically allowed employees to add dependents to their health plans on the honor system. Although these employers work hard to publish and communicate eligibility rules clearly, they don’t collect proof of eligibility.
Without internal controls to weed out the ineligibles, everybody pays the increased costs in premiums. This doesn’t necessarily mean our employees are trying to scam us. Many employees don’t realize they have ineligible dependents on the plan.
Consider, for example, an employee who has been given a court order to cover his former spouse as a condition of a divorce settlement. Many times, the employee isn’t aware that his company’s eligibility policies do not extend to former spouses. So, he continues to cover his former spouse, and the benefits team is usually none the wiser – until the employee comes in to add his new wife to the plan.
Plans that have worked on the honor system should develop some internal policies for documentation before completing a DEVA. They can start by requiring documentation for new hires and employees adding dependents at open enrollment or in the event of a qualifying event during the plan year, such as the birth or adoption of a child.
Official documents include, but are not limited to, birth certificates, marriage licenses, tax records showing a common residence and adoption decrees. Once those procedures are in place, and employees more familiar with the organization’s eligibility requirements, the time is ripe for a DEVA.
DEVAs have become an increasingly popular tool for benefit plan managers over the past decade. Look for firms that have a considerable amount of experience in providing this type of audit with large or similar companies. Choose a firm that offers direct communication and ongoing contact with the employees, thus shifting away any perception of negativity the employee may have about the employer.
The firm should do direct mailings, follow-up mailings and have a customer service team available during business hours (or longer) by phone. They should be able to show demonstrated success through case studies.
Some firms offer post-termination alternatives for health plans in lieu of COBRA, which allow employees to find coverage for ineligible dependents that are removed from an employer plan as a result of the DEVA. Some firms require a flat fee for the DEVA, while others quote the services on a contingency. Look closely at your budget, as well as the fine print in the cost quotation, before choosing one of these options.
We should welcome a tool that has the potential to save a significant amount of money without further reducing benefits. Sure, there might be a bit of an uproar among the troops when the project begins, and we must all be ready to face the potentially embarrassing fact that we could have a significant number of ineligible dependents in our plans. But that’s when that thick skin will come in handy.