Dependent Verification FAQs

Below are the most common questions we receive about dependent verification. If we can assist with any specific needs or questions, please reach out to us.

The basics.

A dependent eligibility verification audit is a process used by employers or plan administrators to verify if the relationship between dependents and the employee or member aligns with the eligibility rules defined by the plan. For example, a valid birth certificate would confirm that a child is an eligible dependent of the member.

This process ensures that only those who qualify as dependents – such as spouses, children, or others defined by the plan – receive benefits, thereby controlling costs and maintaining compliance with plan rules.

An ineligible dependent is someone who does not qualify for healthcare coverage based on the plan's eligibility rules. For example, an ex-spouse would be an ineligible dependent when the plan’s eligibility rules only cover a legal spouse.

If you discover an ineligible dependent, they should be removed from the plan. Then you should conduct a comprehensive dependent eligibility verification audit of all enrolled members. This will ensure no additional ineligible dependents remain on the plan, helping to fulfill fiduciary responsibilities and reduce the risk of a denial on a stop-loss claim.

To ensure ineligible dependents are not enrolled in a benefit plan, a comprehensive review of each dependent’s eligibility should be conducted. This process should then be performed on an ongoing basis for newly added dependents throughout the year and during Open Enrollment. This provides peace of mind knowing that only eligible dependents are enrolled.

Any time is a good time to conduct BMI’s dependent eligibility verification audit! We will work with you to determine the best time for your organization to conduct an audit.

For optimal member experience, a dependent eligibility audit typically takes 12-16 weeks from kick-off to completion. This provides members with enough time to gather documents that they may not have readily available.

 For the plan sponsor and/or the broker consultant, the time commitment averages less than an hour a week. This time is spent on setup, progress updates, and a wrap-up discussion with BMI experts for a presentation of the audit findings and guidance on the next steps.

Contact us and we can provide a detailed plan based on your needs.

It is best to verify the eligibility of all dependents as close as possible to the date they are added to the plan. We recommend starting with a comprehensive verification to confirm your current enrollment is accurate, followed by ongoing verification to verify any dependents added through new hires, qualifying life events, annual enrollment, or mergers and acquisitions.

• Comprehensive verification should be considered every 1-2 years to look for eligibility changes that could lead to an ineligible dependent.

• Spousal-only verifications should be conducted annually to verify the surcharge or carve-out associated with the working spouse rule.

Pricing for dependent verification is influenced by many factors, such as the verification approach and household count. The best way to determine the cost of an audit is to request a quote from the BMI team.

The benefits.

Rising costs. Healthcare benefits are the second largest line item for most organizations and costs continue to increase. Both self-insured and fully-insured plans benefit from dependent verification, which helps to mitigate expenses by removing ineligible dependents.

Based on data gathered from BMI customers in 2023, cost containment was the top motivator for conducting an audit.

Compliance. Completion of a dependent eligibility audit helps to reduce regulatory compliance risk under Sarbanes-Oxley, ERISA, and Department of Labor (DOL) guidelines.

Suspected or known issues. Sometimes, an ineligible dependent is discovered through the normal course of business. A comprehensive dependent verification audit is the best way to ensure that no additional ineligible dependents are currently covered by the plan.

On average, the BMI process finds 9.2%* of enrolled dependents are found to be ineligible for benefits. Results vary based on industry, plan eligibility criteria, and prior verification efforts.

See sample audit findings here.

*Results from audits conducted by BMI Audit Services January 2021 - December 2023.

On average, a dependent eligibility verification audit provides an impressive ROI of 2,251%*. With the average annual employer cost of $7,000 per dependent, the savings identified through an audit often vastly outweigh the cost of conducting one.

Use BMI’s calculator to see how much you may be spending on ineligible dependents.

*Results from audits conducted by BMI Audit Services January 2021 - December 2023.

Yes, dependent verification helps to reduce or prevent healthcare cost increases for plan sponsors, insurers, and members. Here’s how:

• Removal of ineligible dependents to reduce claims and other administrative costs year over year

• Minimize risk of mistakes & fraud by increasing member education and accountability to prevent enrollment of ineligible dependents

• Improve plan integrity and compliance with regulations to avoid risks of fees and penalties

• Prevent ineligible dependents from increasing costs for all members

Dependent verification is a powerful tool for managing and reducing healthcare costs, thereby protecting the financial integrity of the benefits plan.

Organizations that benefit from a comprehensive dependent verification include healthcare plans that:

• have never conducted a dependent eligibility audit

• have not completed an audit within the last 1-2 years

• utilize a spousal surcharge or carve-out

• experience high turnover or company mergers & acquisitions

• have made changes to their coverage or eligibility rules

Organizations that benefit from ongoing dependent verification include healthcare plans that:

• do not conduct ongoing dependent verification

• have recently completed a comprehensive audit

• experience high turnover or company mergers & acquisitions

Yes, BMI’s dependent eligibility verification audits play a critical role in demonstrating fiduciary responsibility and ensuring compliance with regulations like ERISA. These audits help verify that employee benefit plans are administered consistently and accurately by ensuring all covered individuals meet eligibility requirements, and that enrollment is correct.

How it’s done.

The process for members to complete a dependent eligibility audit is easy and quick!

1. Communication
   Clear instructions are sent via email and mail to plan members on how to complete the verification process for each dependent.

2. Document submission
   Members submit required documents through a secure web portal, fax, or mail.

3. Review and verification
   BMI reviews documents to verify the dependent relationship and notifies members if any additional information is needed.

4. Results
   BMI shares the verification results with the plan sponsor throughout the process. 

The documents required for dependent eligibility verification typically include common documents that show the dependent's relationship to the plan participant. BMI can accommodate any type of relationship allowed by the plan.

Examples of a few common relationships with documents that could be requested are:

Spouses: Marriage certificate, tax return showing joint filing, or other proof of ongoing relationship
Children: Birth certificate, adoption papers, court order, or proof of guardianship
Other: Legal documents proving custody or financial dependency

Organizations should consider a third party for dependent eligibility verification because conducting an internal audit is time-consuming and resource-draining. Hiring BMI saves time, ensures objectivity, and minimizes conflict by providing a buffer between HR and members.

With BMI’s process, the plan sponsor and/or the broker consultant typically spends less than an hour a week on the project. BMI provides robust tools and services to manage the entire eligibility verification process so that you don’t have to.

These include:

• Experienced personnel dedicated to dependent eligibility verification

• Personalized and effective member notifications

• Fully managed distribution of communications

• Online portal for member resources and document submissions

• Member assistance through our U.S.-based Call Center

• Detailed review of submitted documents

• Individual follow-up for members with incomplete documents

• Online client portal with access to project status and details

• Wrap-up consultation with recommendations for next steps

It is important to consider various factors before hiring a third party for dependent eligibility verification. What matters most is selecting a third party that your organization trusts and is the best fit for your members.

We recommend also considering:

• How long have they been in business?

• Do they have the necessary privacy, security, and insurance policies?

• Is dependent verification a core service?

• Is any part of the service outsourced or subcontracted?

• Are all parts of the service performed in the United States?

• Could other service offerings be considered a conflict of interest?

• Do members have different options to submit required information?

• Is live help available for members who need assistance?

• Is the verification process easy to follow and complete?

• What is included in the price and what may cost extra?

If a participant needs help, they can reach a live BMI representative via our U.S.-based helpline, available Monday–Thursday, 8 AM–7 PM ET, and Friday, 8 AM–5 PM ET. Participants can also submit a request for assistance through our member portal.

Types of verifications.

BMI offers two types of dependent eligibility verification.

Comprehensive Dependent Verification
A comprehensive dependent eligibility audit is a thorough, documentation-based verification of all enrolled dependents within an organization's health plan(s). Results leave the organization with an accurate list of dependents who did and did not meet the specific eligibility requirements. 

Ongoing Dependent Verification
Ongoing dependent verification regularly checks the eligibility of dependents added through life events, new hires, open enrollment, and mergers & acquisitions. Conducted monthly, bi-monthly, or quarterly, this process helps prevent future coverage of ineligible dependents.

Additionally, comprehensive and ongoing verifications can also include a Working Spouse or Affidavit-Only verification.

The industry best practice is a combined approach that includes a comprehensive audit followed by ongoing verification. BMI can help you select the ideal approach for your needs and those of your members. Contact us for more information.

Yes, BMI has a standard process for verifying if a working spouse has other insurance options. If they do, a spousal surcharge may be added to the member's premium or the spouse may be excluded from the plan through a spousal carve-out policy.

Working spouse verification can be conducted as part of a comprehensive dependent eligibility audit, during ongoing verification, or on its own.

Yes, eligibility verification can be conducted for spouses without including dependent children. Since divorces often go unreported, it’s wise to review marital status annually to ensure accurate records.

Yes, BMI can accommodate an affidavit-only verification. An affidavit-only dependent verification relies on the member attesting their dependents meet the plan’s eligibility requirements. This process does not require members to submit supporting documents like marriage certificates, birth certificates, or tax returns.

Although an affidavit-only option is available, BMI strongly recommends collecting documents to verify eligibility and ensure compliance with fiduciary responsibility requirements.