Dependent Verification – An Effective Cost Containment Strategy
Business Situation & Client Profile
To help combat rising health insurance costs, the internal audit department of a global engineering and manufacturing company engaged BMI to verify whether 511 enrolled dependents were eligible for the company’s medical and dental health plans.
Solution
BMI customized an audit plan to meet the following objectives:
Communicate the purpose of the audit, deadlines, compliance requirements, etc. to all employees with one or more dependents.
Provide a customer service department with toll-free phone lines and bilingual staff.
Compare plan eligibility requirements with documentation submitted.
Identify all dependents currently enrolled who do not meet eligibility criteria.
Securely collect and retain all verification documentation.
Report findings weekly and provide a final executive summary of results.
Audit Findings
A 100% participation rate
55 dependents (10.76% of total) failed to meet plan eligibility requirements.
Reasons for ineligibility included eligibility for coverage through the dependent’s own employer but did not enroll and voluntary withdrawal upon receipt of existing eligibility information.
Audit Outcome
The client terminated coverage for 55 dependents who were identified by the audit to be ineligible. Coverage was also terminated for 17 additional dependents who provided incomplete information despite multiple communications prior to the deadline.
First Year Savings Calculations
Average Annual Cost per Dependent: $300-$4,000
Calculated Annual Savings from Dependents Removed: $280,600
Return on Investment: 2,613%
Use our savings calculator to see how much your company can save.