Should an Employer Conduct Their Own Dependent Eligibility Audit?
When considering whether or not conduct an audit in-house, most employers don’t realize that a dependent eligibility audit will be a significant undertaking. An employer must consider they will need to:
Review plan documents to determine the definitions for all possible eligible dependents.
Determine the documentation required for substantiating eligibility. For example, in the case of a spouse, this may be not only a marriage license or certificate, but also a recently filed joint income tax return to show that the marriage continues to the present day.
Establish a timeline for informing employees about the audit as well as a deadline for submitting the required documentation,
Develop and distribute communications materials accordingly.
Determine the process by which employees can submit their documentation, and set up a mechanism to receive materials.
Review submitted documentation to determine whether they meet the requirements for establishing eligibility, and establish a notification and grace period process for employees who fail to submit materials properly and/or on time. Inform employees of the audit results.
Arrange for secure storage and/or disposal of the materials employees have submitted.
Assign a knowledgeable person or persons to field employee inquiries since the audit will likely generate questions.
Additionally, hiring an outside vendor provides a buffer between Human Resources and the employees. An experienced and knowledgeable dependent eligibility audit provider can compare the language of the plan and the administrative procedures in sure and make recommendations to integrate the audit process with current administrative procedures in use by Human Resources. In addition, an audit provider will leave the employer with a criteria map of eligibility verification requirements so, that if the employer desires to, can integrate those criteria into new enrollment and status change procedures to maintain updated dependent eligibility.