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Presented by Mark Helton
We’ll briefly cover the basics of a
dependent verification review and then do a
deeper discussion on why it’s an important
tactic for businesses today
Today’s Webinar
Overview01. What is a Dependent
Verification Review?
02. Who Should Consider a
Verification Review?
03. Ineligibles: How Does it Happen?
04. Best Practices
05. Case Studies
Meet Mark
3
Who is Mark Helton?Mark is responsible for dependent verification strategic initiatives
for Hodges-Mace clients and brokers. He spent the first 25 years
of his career in HR management, and has 8 additional years
experience specializing in dependent review process design,
implementation, and management.
Areas of Expertise
Human Resources Management
Dependent Verification Strategy
Dependent Review Project Management
Dependent Verification Consulting
WHAT I S A
dependent
verification
review?
01PART
What it is vs. What it’s notWhen people hear the term “audit,” it brings to mind something bad that could happen to your tax return. In truth, a
dependent audit is a preventive measure that helps you assess the accuracy of your dependent enrollments.
IT IS IT IS NOT
Protection for employees
A review confirms that the people an employee is
responsible for covering won’t run into financial and
legal problems down the road.
Added peace of mind
It’s an opportunity to confirm that people who are
important to the employee are covered and protected.
A way to true up plan participants
A review seeks to confirm who should be on the
plan according to the rules of the plan.
A fishing expedition
It is not meant to identify people who are using the plan
in the way it is meant to be used.
Punishment / accusation
A dependent audit only aims to ensure people who are on
the plan are legal able to take advantage of the benefits.
A way to exclude eligible individuals
Audited employees have the opportunity to
correct any missing or incorrect documentation.
Why it Matters
A dependent verification review provides confirmation that the employer is
being a good steward of both the employee’s and the employer’s
healthcare dollars.
Company Employee
WHO SHOULD CONSIDER
A dependent
verification
review?
02PART
Should you consider a dependent review?
8
A dependent review may be
worthwhile if your company is large
enough that HR does not know:>500An organization over 500
employees on a health care plan is
a prime candidate to participate in
a review.
5%-12%In general, 5%-12% of dependents
on health care plans are ineligible.
$250,000These numbers reflect an average
of $250,000 savings per 1,000
dependents enrolled.
Each employee and their family status
The family members of each employee
Who of those family members are allowed
to be on a health care plan
INEL IG IBLES :
How does it
happen in the first
place?
03PART
Let’s Look at a Few Scenarios
10
SCENARIO 1: Not Understanding the Plan’s Rules
• Following a divorce a court order is issued for an employee
to pay for coverage for the former spouse for the next two
years.
• What the employee does not realize is the court order states
the employee must pay for the coverage – the court can’t
order the employer to pay for the coverage and in fact that
person is no longer eligible. Likewise, former stepchildren are
no longer eligible.
SCENARIO 2: Rising healthcare costs
• As healthcare costs continue to strain family budgets,
employees are seeking ways to reduce their financial burden.
• Employees may add ineligible relatives or friends to their plan
in exchange for monetary compensation, effectively giving
themselves a discount.
While this is a common practice with shared
services like mobile phones, sharing one’s benefits
with people who are not eligible poses a financial
risk to everyone involved.
In trying to do the right thing, the employee is
unwittingly including ineligible dependents on
their employer’s plan. This exposes them and the
company to undue financial risk.
An oil and drilling company has an employee with an ineligible
dependent on the plan.
That dependent incurs a $250,000 claim, which the company
pays. When the company files a claim for reinsurance, it is
denied.
Time for a poll: What would you do?
A Real Life
Example
Sue the Employee for Payment
The company could sue for payment of the
claim, but doing so would severely harm
employee relations and perception.
Pay the $250,000 and Hopefully No More
The company could pay the initial claim, and
hope that the dependent does not incur
additional expenses.
Pay the $250,000 and Then Some
The company could pay the $250,000 and still be
on the hook for any additional expenses
associated with the original claim.
A
B
C
Take the Poll
Here’s What
Happened
The employer felt a lawsuit would be financial damaging; they
had not set any precedent around dependent eligibility.
The PR nightmare was too daunting to be worth the risk.
In the end, the employer paid costs for the claim and may be
on the hook for future costs associated with the claim. Pay the $250,000 and Then Some
The company could pay the $250,000 and still be
on the hook for any additional expenses
associated with the original claim.
C
BEST PRACTICES :
Things to know
when considering a
dependent review
04PART
14
Best TimeTo Conduct a Review
While every business has a different busy season, there is one hard and fast
rule around the best time to conduct a dependent review.
At the same time as
Annual Enrollment
Second or third quarter
after Annual Enrollment
First quarter following
Annual Enrollment
Typical Review TimelineThe dependent verification review process should have three components.
15
Planning Phase – 4 weeks
Verification Phase – 6 weeks
Grace Period – 4 weeks
Ongoing Review ProcessMany employers choose to perform maintenance reviews of new dependents on an ongoing basis.
This process prevents re-accumulation of ineligible dependents on the plan.
16
01.
Start with a clean
population
02.
New hires or mid-year life
events take place
03.
Mini-audit cycles are
conducted on newly added
dependents
05.
Selective audits conducted
on changing populations
04.
Exception reporting used to
identify potentially ineligible
dependents
Keys to a
successfulreview
HR
WORKLOAD
EXECUTIVE
SUPPORT
CULTURE AND
EMPLOYEE
PERCEPTION
Considerations for Success
17
There are many factors and internal stakeholders you should consider when planning for a dependent
verification review.
COST AND ROI
Best Practices
18
CommunicationsInclude a well planned communication process,
including an announcement, reminders, and email and
phone assistance for employee questions and clear
timelines for completion.
Returned Mail and CleanupHave a well-defined process for tracking and following
up on returned mail to ensure that employees receive
proper notifications and other communications.
Documentation GuidelinesClearly communicate examples of acceptable
documentation that employees are required to
submit.
Best Practices
19
AccessibilityAccount for various ways for employees to submit
documentation. (e.g., fax, web portal upload, email,
smartphone photo, USPS, etc.)
Process MonitoringInclude access to real-time portals for project
tracking for both the employee and the HR team.
Project ManagementBest-in-class dependent verification reviews will
include regular follow-up intervals to provide HR
with updates on project progress.
CASE STUDIES :
A quick look at a
few client success
stories
05PART
S a v i n g s v i e w e d a s r e d u c e d
a d m i n i s t r a t i v e c o s t s a n d
d e c r e a s e d e x p o s u r e t o
h e a l t h p l a n
Industrial Drilling
21
Dependents enrolled in
medical coverage with
the company
530
$412,000in first
year savings
$412kPercent of
dependents found to
be ineligible – or
103 total
20%
CASE STUDY
Auto Manufacturing
22
Dependents enrolled in
medical coverage with
the company
3,098
$1,130,000 in first
year savings
$1.13MPercent of
dependents found to
be ineligible – or
260 total
8.4%
CASE STUDY
Healthcare Provider Initial Review
23
Dependents enrolled in
medical coverage with
the company
12,000
$3,200,000 in first
year savings
$3.2MPercent of
dependents found to
be ineligible – or
1,000 total
8.3%
CASE STUDY
First review was conducted in 2012
Healthcare Provider Second Review
24
Dependents enrolled in
medical coverage with
the company
6,187
$2,200,000 in
additional
savings
$2.2MPercent of
dependents found to
be ineligible – or
689 total
11.1%
CASE STUDY
Second review took place in 2016
Frequently Asked
Questions
Frequently Asked Questions
26
Question 1How do we prepare the employees for
upcoming review?
Question 2
What are some best practices for preparing
executive expectations?
Question 3
Should I do this myself or should I hire a service?
Question 4
What are the benefits of having an
ongoing review process?
Question 5How are past claims handled?
Question 6
How should we handle late submissions?
Question 7
When are ineligibles removed from the plan?
Question 8
Is there any risk to ineligibles misusing the
plan leading up to removal?
