One of the key components of good plan administration is the tracking of changes in eligibility not only for your employees but for their dependents as well. Imagine an employee who inadvertently or intentionally fails to report a change in status of his/her spouse to his/her ex-spouse. An ex-spouse is no longer eligible for the plan.
The employee may eventually report this change when they want to add a new spouse, but then what? Who is responsible for the payments that have occurred both on the premium side and the claim side? Perhaps a deceased or ex-spouse is still listed as a beneficiary. This could cause a variety of issues if not rectified.
Very small employers may think of their employees as family and are certain that they are aware of the life events happening in the lives of their employees. But as employment grows or as management changes occur, employers with as few as 15 or 20 employees may not be as involved in their employees’ personal affairs.
Today, dependent eligibility audits, in which companies demand proof that spouses and children qualify for medical benefits, are swiftly becoming both fashionable and financially rewarding for companies frantic to curb the runaway costs of health coverage. The goal: to cull the benefit rolls of ineligibles, which could include ex-spouses, stepchildren who live elsewhere, or 29-year-old college grads still being claimed as dependents.
Defining to your employees what an eligible dependent is and conducting periodic dependent eligibility audits may help save time, money and, in some cases, legal hassles.
For more information about tracking changes in dependent eligibility status, contact Patty Smith at 814/833-3200, 800/815-2660 or psmith@mbausa.org.
