Dependent Eligibility Verification Audits

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Guest Columnists:

John Schultz, J.D., LL.M., Managing Director

Brook L. Erker, CPA, Director

Denver Compensation & Benefits, LLC

In an environment of skyrocketing health care costs combined with a struggling economy, employers are increasingly looking at new methods to reduce costs and at the same time stay competitive.  Health care costs are the third largest expense for employers, and therefore a significant cost containment area available to employers.  One tool to reduce health care costs that has gained quite a bit of attention recently is the dependent eligibility verification audit.  This relatively new type of audit is becoming a standard in large and small companies alike because of the impact it can have on costs. Statistics vary by source but in general show that approximately 3% to 12% of dependents in a health plan are not eligible for coverage.  By removing these ineligible dependents, employers are experiencing cost reductions related to medical costs.

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