Typically, 3–10% of dependents in employer plans are ineligible.
Dependent eligibility verification is one of the most overlooked parts of Open Enrollment. But it’s also one of the biggest cost drivers if it’s ignored.
Pitfall #8 highlights:
• Risks of skipping dependent verification
• Why ineligible dependents stay on plans year after year
• How successful plan sponsors are solving this
✦ INSIDER INSIGHT
A solid benefits program aligns eligibility definitions across all plan documents, require proof when dependents are added, and run full audits periodically. Employee communication is key.
Need support with dependent eligibility verification? @hcmtechadivsory, we help audit your dependent records to ensure your benefits data stays accurate, compliant, and cost-effective. Connect with us to discover more.
WHY THIS MATTERS
- Dependent audits are not only compliance tasks, they’re cost containment tools
- Covering them can add hundreds of thousands of dollars in annual cost
- Carriers may deny claims or cut back payments if eligibility rules aren’t followed
WHAT GOES WRONG
- Plan Documents lack proper definition of who is a “Dependent”
- Ex-spouses, grandchildren, or over-age dependents stay on plans year after year
- Systems default to rolling forward old dependent elections
- Costs rise with no clear explanation or employer is on the hook for ineligible claims
ROOT CAUSE
- No dependent verification process during/post-OE
- Systems not configured properly to align with eligibility rules
- Inconsistent eligibility definitions across plan documents
- Lack of vendor coordination
HOW TO FIX IT
- Educate employees on dependent eligibility, required proof, timelines
- Verify dependents each time they are added to the plan and perform audits annually
- Configure systems to align with dependent eligibility rules
- Unify definition of dependent eligibility in plan documents, summary plan descriptions (SPDs), benefits guides and employee handbooks
Want to avoid costly surprises during Open Enrollment? We can help. Let’s connect.
