Audit of Dependent & Other-Employer Provided Health Insurance Reduces Costs

Business Situation & Client Profile

This institute of higher education elected to conduct a dependent eligibility audit to 1) ensure whether or not all 1,742 enrolled dependents were eligible to receive benefits and 2) verify if any of those dependents should be paying a surcharge due to eligibility in their employer’s group coverage. 

Audit Finding

  • 19 dependents (1.09% of total) failed to meet plan eligibility requirements.

  • Reasons for ineligibility included voluntary removal, divorces or a relationship not allowed per the plan.

  • 188 dependents (10.79% of total) should pay a surcharge due to being eligible to enroll in their employer’s group medical plan.

Audit Outcome

The client terminated coverage immediately for the 19 dependents who were identified by the audit to be ineligible and began to apply a coverage surcharge for the 188 dependents. Additionally, coverage was terminated for another 32 dependents who did not respond completely prior to the audit’s deadline despite multiple communications.

First Year Savings Calculations

Average Annual Cost per Dependent: $3,500 Est. Annual Savings from Dependents Removed: $178,500 Est. Total Annual Surcharge: $225,600 Return on Investment: 2,553%

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