Ineligible Dependent Removal Saves Company over $600k

Business Situation & Client Profile

An automotive manufacturing facility looking to reduce unnecessary healthcare costs engaged BMI to verify whether any of the 1,057 employees enrolled were covering ineligible dependents.

Solution

BMI customized an audit plan to meet the following objectives:

  • Communicate the purpose of the audit, deadlines, and compliance requirements to 1,057 employees and their enrolled dependents (2,107).

  • 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

  • 7.31% of audited dependents found to be ineligible for benefits.

  • 66 dependents (2.97% of total) failed to meet plan eligibility requirements.

  • Employees covering 88 dependents did not provide complete verification information or failed to respond.

  • Reasons for ineligibility included unreported divorces, unmarried couples and relationships not covered by the plan.

Audit Outcome

The client terminated coverage for all dependents who were identified to be ineligible and those who failed to respond or verify eligibility prior to the submission deadline.

First Year Savings Calculations

 Average Annual Cost per Dependent: $4,000

 Calculated Annual Savings from Dependents Removed: $616,000

 Return on Investment: 2,378%

Dependent EligibilityRobert Temples