Every year the number of Dependent Audit RFPs produced by brokers and consultants spikes in the third quarter. Frequently these RFPs are accompanied by a request for a proposed timeline to coordinate the Dependent Verification Project with Open Enrollment. This inevitably leads to a discussion of the pros and cons of a Dependent Audit run in conjunction with OE (Open Enrollment), and in most cases leads to either postponement of the project until after OE, or less often a decision to launch and complete the project before OE begins.
To be clear, the practice of dependent verification with Open Enrollment is common and a great idea, but only on these conditions:
- The verification is limited to spouses and step-children in the plan
- That client has already done a comprehensive dependent audit
- The client is managing dependent verification in an ongoing basis for new hires and/or plan additions.
While running a comprehensive dependent verification project alongside OE might seem on the surface to some like a good idea, with the “get everything done at once” mindset, there are a number of reasons an organization should think twice – or three times- before deciding to do a Dependent Audit in conjunction with Open Enrollment.
Reasons to Keep Open Enrollment Separate
- Focus: Employees during Open Enrollment need to be focused on understanding the details of their open enrollment. In most OEs there are carrier changes, plan design changes, voluntary products being introduced, new benefits software or other items that require employees to focus and understand their benefits. Dependent verification can become a distraction, or at worst become the reason an employee makes an unfit benefits election.
- Participation Rate: Employees during OE are focused on the priority of benefit changes, leading a lower overall response rate of employees who submit dependent documents in a timely manner. Average employee response is over 98%, but in a parallel dependent audit with OE, the average employee response rate drops to close to 91%.
- Source: During OE, the source of communication is generally the Human Resource department, leading to less probability of employees paying attention to communications from an outside source like a dependent verification vendor. Employees frequently ignore mail from an unknown return address, leading to lower response rate in the dependent audit. That leads to downstream noise for HR as passively removed dependents may need to be re-added due to employees coming forward with verification documents weeks or months after the project is closed.
- Time: In a successful dependent audit, employees have 30-45 days to submit documentation to verify dependents. Most OE windows for employees to submit their benefit elections and changes is much shorter, only 1-2 weeks. This does not leave sufficient time for employees to order and receive missing birth certificates, marriage licenses, or USCIS paperwork, all of which take 3-4 weeks. When a dependent verification audit is included with Open Enrollment there is bound to be noise from employees that they don’t have enough time to submit verification documents, not to mention the confusion of the dependent verification deadline versus the open enrollment deadline.
- Employee Morale: A good dependent audit vendor will go to great lengths to minimize impact on employee morale through a dependent verification project. Best practices include not using the word audit, providing stellar communication pieces with clear instructions, offering resources to find documents or alternate insurance, and more. If a company is making changes at OE that employees perceive as cuts to benefits, i.e. move to full Consumer Directed Health Plans, reduction in HSA contributions, removal of a voluntary benefit, increasing employee share of premiums… employees might already have a bad taste in their mouth around their benefits. Piling on the requirement to find and submit verification documents is unnecessary.
- Impact on HR: It’s no secret that Open Enrollment is the most stressful time of year for most benefits departments and HR teams. Employee confusion surrounding benefits is a national challenge, and HR teams are often stretched thin to meet the needs of employees (and management) during OE. Adding the layer of a Dependent Verification audit to OE is an unnecessary addition of headache.
- The Loophole: The incompatibility of OE and DEV is most strongly evidenced by the loophole that some employees inevitably find. If an audit is run based on the census of covered dependents before OE, the audit can remove dependents from one plan year that are re-enrolled by the employee in that OE for the next plan year. This means that if a client runs OE concurrent with a Dependent Audit, a second batch of verifications must be run after OE is complete, to ensure none of the voluntary or passively removed dependents have been re-enrolled for the new plan year, and to ensure newly added dependents are also verified. This creates double work for the client or vendor partner working with the client. In some cases clients do not understand the need to conduct a “catch up” batch of verifications after OE, thereby allowing the same dependents removed by the audit to be reenrolled and covered just a couple months later when the new plan year begins.
The arguments against conducting a Dependent Verification Audit with Open Enrollment far outweigh the potential positives. While the temptation by an HR department may be to try and conjoin a dependent audit with open enrollment to do it all at once, the impact on employees, response rate and HR do not make it worth while.
Note: In rare cases OE and a concurrent DEVA (Dependent Eligibility Verification Audit) can be justified, such as in the wake of a merger or acquisition. Even then, however, there are a number of critical best practices to minimize impact on employees and HR and maximize participation.
For more information on the best practices for Dependent Audits, or a quote, contact DSI (Dependent Specialists, Inc.) today. We’d be happy to speak with you.