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Cut health insurance costs by uncovering ineligible dependents

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in Employment Law,Human Resources

Employers are looking for ways to cut health care costs, which continue to rise each year. One of the easiest ways to trim that expensive bill: Make sure each and every employee’s dependents are actually eligible for coverage.

If your open enrollment period is coming up soon, now is the time to work with your health insurer to weed out ineligible dependents.

Begin by reading your health insurance agreement. It outlines who is eligible for coverage. For example, your plan probably requires children over age 18 to carry a minimum number of college credit hours to qualify for coverage. If you haven’t asked employees to prove that’s the case, you may be enrolling (and paying the premium for) ineligible dependents.

Remind employees that enrolling an ineligible dependent may constitute fraud — which can lead to discharge. Then make sure your employment policy spells out the consequences. Often, the reminder is enough to get employees to voluntarily drop ineligible dependents at open enrollment time.

Conduct an eligibility audit

Next, work with your insurer to schedule a company-wide eligibility audit. Your insurer may then ask you and your employees to provide proof of eligibility. This can include:

  • Copies of marriage certificates to prove legal marital status (and stepparent status for stepchildren, if the plan covers them).
  • Birth certificates or adoption decrees.
  • College enrollment letters or bills showing that children over age 18 are taking the required number of higher-ed courses to qualify for insurance coverage.
  • For disabled children over age 18, a current written statement from the attending physician.
  • Custody or support orders showing the employee is responsible for providing health insurance coverage for children not in the household.

Put it in writing

To make sure everyone understands that you take dependent eligibility seriously — and that there are consequences for attempting to falsify enrollment information — craft a policy and include it in your employee handbook.

Here’s a sample policy you can adapt for your organization:

Sample policy:  [Employer] provides health insurance coverage for eligible employees and their dependents in accordance with the terms of the current health insurance plan. Enrolling persons who do not meet the definition of dependent in the plan is considered fraud and may result in dismissal. All employees should familiarize themselves with the health plan definitions. Employees may be asked to prove that a person listed as a dependent actually meets the definition. This may mean providing marriage and birth certificates or other proof.

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