Client Achieves a 1,200% Return of Investment Ratio
This time of year is ideal for any employers considering a dependent eligibility audit. Any intentions to audit can be communicated to employees during open enrollment with an audit shortly following after enrollment closes.
Business Situation
A large diversified worldwide specialty metals producer came to BMI regarding their needs for a dependent eligibility audit. Because covering ineligible dependents drives up the costs of health care for all participants, the employer’s objectives for the audit were to:
Identify and remove those enrolled who do not meet eligibility criteria.
Verify accuracy of enrollment records.
Satisfy due diligence and comply with ERISA requirements.
Client Profile
Specialty Metals Producer
4,362 employees covering 7,196 total dependents
Audit Finding
183 dependents (2.54%) failed to satisfy the plan’s eligibility criteria. A majority of those who failed were due to the fact the dependent’s employer offered group health coverage, but did not enroll despite being eligible. Other ineligible dependents included those who were divorced, but failed to relay this information until being audited.
Audit Benefits
The client terminated coverage for 183 dependents (2.54 % of total). Given that the employer’s average dependent costs the plan $4,087 per year; our client obtained a minimum first year savings amount of more than $747,921, for a return of investment ratio of 1,200% while meeting all the audit objectives.