Attempted Ineligible Dependent Enrollment Doubles (Hitting All-Time High)
By Michael Gaudette
Attempted Ineligible Enrollment

The first month of 2021 revealed a historically high rate of attempted ineligible dependent enrollment.

It’s no secret that the vast majority of mid and large employers verify dependent eligibility at the point of enrollment and have a plan year renewal of January 1. And Across the last five years of Q4 open enrollments, from 2015 through 2019, the average attempted ineligible dependent enrollment rate for these employers has been 2.9-3.0%. However, in January 2021, the attempted ineligible dependent enrollment rate is exceeding 6.1%. That’s more than double any of the last five years!

Three key factors are driving this spike in attempted ineligible dependent enrollment.

DISAPPEARING DOMESTIC PARTNER COVERAGE

In 2015 the US Supreme Court struck down DOMA (Defense of Marriage Act), opening every state and US territory to same-sex marriage. Since then, employers gradually removed Domestic Partner coverage, with less than 18% of groups still offering health benefits to Domestic Partners in 2021. The desire to accommodate same-sex couples unable to marry originally popularized Domestic Partner coverage. But in most employers’ eyes, now that any two people can marry each other, there is no longer a need for Domestic Partner benefits.

The impact of the evolving eligibility rules is that some Domestic Partners are no longer eligible, leaving them with only a few options:

  1. Get married.
  2. Get an individual policy.
  3. Go without insurance.
  4. Attempt to stay on the insurance they already had despite being ineligible.

Our data shows that 34% marry, 13% go elsewhere or without, but a substantial 53% of ineligible Domestic Partners attempt to stay on the same insurance.

How to limit this type of attempted ineligible dependent enrollment:

A simple eligibility check on these former Domestic Partners either removes them from the plan, or they’ll magically decide to marry on short notice. Either way, your plan wins financially and through increased compliance.

LACK (OR COST) OF INDIVIDUAL POLICY OPTIONS

The most expensive ineligible dependent identified in a Dependent Audit is the former spouse.

Divorce decrees frequently require the working employee to continue providing similar health care coverage to the former spouse. Still, a look at the individual marketplace reveals few options in most states. If there are options, they are more expensive than the historically shared cost of employer-sponsored benefits. Faced with the choice, employees conveniently fail to report the divorce to their employer. The data suggests that the cost of healthcare is a factor that keeps some couples from divorcing.

How to limit this attempted ineligible dependent enrollment:

A simple spousal eligibility check after every Open Enrollment deters employees from keeping former spouses on the plan, especially if they receive resources detailing where to find an individual policy for that former spouse.

COVID-19

There is no bigger culprit for the spike in attempted ineligible dependent enrollment in 2021 than COVID-19. The global pandemic’s economic downturn has far-reaching, complex implications, with rising unemployment, closed businesses, delayed healthcare utilization, and more.

While employees have options if they lose their job, i.e., COBRA or individual policy, the most cost-effective option without a waiting period is to claim a qualifying event and join an employer-sponsored plan of a family member. The 2021 spike in attempted ineligible enrollment is disproportionately for young adults age 18-25; a group hit hard by unemployment from COVID-19 business closures. Girlfriends, boyfriends, over-age children, spouses of eligible children, and grandchildren lead the list of attempted ineligible enrollments.

How to limit this attempted ineligible dependent enrollment:

A simple post-enrollment dependent eligibility verification will remove those ineligible COVID-19 enrollments.

CONCLUSION

2021 brings a 100% increase in attempted ineligible dependent enrollment to employer health plans. The erasure of Domestic Partner coverage, the lack of individual plan options, and the COVID-19 economic impact all play a role in the spike. Thankfully all can be negated by post-enrollment dependent eligibility verification.

Don’t wait. As ineligible dependents creep on, costs quickly rise, and compliance becomes an issue. Our experienced team will get you back on track with the least amount of noise for you and your employees. Contact DSI’s Dependent Verification Specialists to get a proposal for your plan today.

Sensitive Solutions, Real Savings

DSI provides customized, professional and proven Dependent Eligibility Solutions without harming employee morale.

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