During a dependent verification audit, employers are often in the difficult position of removing ineligible dependents while trying to avoid negative impact on employee morale. While it is true that some employees knowingly cover ineligible dependents and quietly, guiltily remove them, other employees learn through the audit process that they were genuinely mistakenly covering dependents with their employer-sponsored benefits coverage. In either case, the employee is often left wondering what to do to provide medical coverage for the removed person, usually a loved one.
Employers are not required to offer COBRA to individuals removed through dependent audit verification. The dependents were not eligible at time of removal from benefits, and therefore the employer is under no obligation to offer COBRA. However, a best practice by leading Dependent Verification and Audit firms is to promote tools to help removed individuals find insurance. Most of us, when we need a product or service very quickly (or maybe even urgently), don’t always take the time we should to research different options and vendors.
Private exchanges have been the most popular option, but through underwriting for individual policies roughly 20% of individuals have been unable to find coverage due to pre-existing conditions. With the launch of public exchanges through PPACA (open enrollment began 10/1/13), many of those hard-to-insure individuals removed through Dependent Audit process will be able to find alternate sources of guaranteed issue medical coverage beginning 1/1/14. Private exchanges might cost less, but public exchanges are guaranteed issue. Leading Dependent Audit firms offer connectivity to private exchanges and public exchanges.
Dependent Audit Verification has become an essential piece of employee benefits, and must be administered with the delicate balance of heft and sensitivity. There is always the risk of annoyed employees, or even offended employees, but the best method to mitigate employee backlash against HR or the employer is to offer resources and a direction to find new coverage.