Drawing on 14 years of Dependent Audits in every industry, every geography, and every demographic, here are the four most prominent incorrect assumptions groups (and sometimes their brokers) believe:
False Belief #1: “Dependent Audits should wait until after Open Enrollment.”
Uneducated brokers and clients often believe that the “only good time” to do a Dependent Audit is after Open Enrollment. However, for a self-funded health plan, the best time to do a Dependent Audit is as soon as possible. Every day a plan covers ineligible dependents, there is the potential for expensive claims, for which the client is responsible. CFOs reject the idea of waiting months for Open Enrollment to do a Dependent Audit, which is why DSI conducts Dependent Audits every month of the year.
False Belief #2: “You should never do a Dependent Audit in the Summer.”
Some clients think they cannot do a Dependent Audit during the summer because of the popularity of employee vacations when school is out. There’s nothing better than experience. In 14 years of Dependent Audits, the simple truth is that there is no difference in member participation in a Dependent Audit between a summer month or any other month.
The reason is simple: employees typically take a one-week vacation (or less), while the document submission period and grace period are more than a month. That means even if they take a week or two for vacation, they still have several weeks to comply with the verification requirement. Further, a proper dependent uses email in addition to US mail to engage employees, and many employees check email on vacation, especially when it’s their personal email address.
False Belief #3: “You should never do a Dependent Audit in December.”
Open Enrollment for many employers falls in October or November, with the new benefit plan year starting January 1. Some groups have expressed concern about conducting dependent eligibility verification in December because of fear that people travel for the holidays. Still, just as with Summer months, the document collection period plus grace period is several weeks, so even a vacation for a week or two for employees to visit grandma still leaves them weeks to submit eligibility documents.
There is virtually no difference in participation between December and any other month. In fact, for groups with a January 1 plan year, from a financial viewpoint, December is the best month to audit because ineligible dependents can be removed from coverage BEFORE the plan year begins, removing all risk of claims incurred by an ineligible dependent.
False Belief #4: “We can wait to do our audit because we’re fully insured.”
Only a near-sighted broker would advise a client to wait on a Dependent Audit or question the value of one because they are fully insured. The fact is that ineligible dependents cost 31% MORE than eligible dependents on average. Why?
Because the whole reason employees sneak ineligible dependents into the plan is that they need the insurance.
Employers with fully insured medical plans should be as eager to verify all dependent eligibility as any Self-Funded plan. Any CFO would agree.
Summary
The best time to do a Dependent Audit is not up for debate, whether Self-Funded or Fully insured. Groups should not postpone Dependent Eligibility because of fear of Summer or December vacations. The risk of incurred claims on any given day should motivate all plan sponsors (and their brokers) to prioritize Dependent Eligibility year-round.
