Dependent Eligibility Audit Produces A 10:1 Return on Investment Ratio
Business Situation
Our client was referred to BMI by their employee benefits consultant regarding their needs for a dependent eligibility audit. The purpose of the audit was to confirm that benefit dollars were only being spent on eligible participants while meeting the following objectives:
Identify all dependents currently enrolled who do not meet eligibility criteria.
Examine 100% of all eligibility records to identify covered employees with one or more dependents.
Communicate the purpose of the audit, deadlines, compliance requirements, etc. to all employees with one or more dependents.
Provide a dependent eligibility customer service department with toll-free phone lines and bilingual staff during normal business hours.
Securely collect and retain all verification documentation used to confirm eligibility.
Compare plan eligibility requirements with documentation submitted.
Report findings periodically and an executive level overview to analyze potential savings.
Client Profile
Small industrial tool and parts distributor
114 employees covering 253 total dependents
Audit Finding
97% of the total participants completed the audit. Of those, 19 dependents (7.51% of total) failed to satisfy the plan’s eligibility criteria. Many of those who failed were spouses who were eligible for coverage through his or her employer.
Audit Benefits
The client terminated coverage for 19 dependents (7.51 % of total). Given that the employer’s average dependent costs the plan about $3,000 per year; our client obtained a minimum first year savings amount of $57,000. This amount translated to a return on investment ratio of 10:1 for the client while meeting all audit objectives.