Dependent Audits: An Easy Way to Save on Healthcare Costs

Dependent Audits: An Easy Way to Save on Healthcare Costs

Health and Benefits

Dependent Audits: An Easy Way to Save on Healthcare Costs

When was the last time you completed a dependent eligibility verification audit? A thorough audit finds dependents on health care plans who are no longer eligible for coverage — a simple oversight that can cost your organization thousands or even millions each year.   

Lexi Trampe, who manages Mercer clients through this process, provides insight into this growing trend and why these audits are so appealing for small and midsize organizations.

Please describe dependent audits, and why they are becoming so popular.

Lexi Trampe: Plain and simple, cost savings. Dependent audits monitor and verify the eligibility of employees and their dependents enrolled in a company’s health plan. At first glance, you might not be too concerned about a few ineligible individuals on a plan until you realize that the average cost of each covered dependent is $4,570. And, in our audits, we often find many, many individuals who should no longer be on a company’s plan. This can add up to thousands, even millions, of dollars.

The average cost of each covered dependent is $4,570.

You mentioned audits can save a company sizable sums. Can you elaborate?

LT: Sure. In 2015 alone, Mercer was asked to conduct dependent audits at 53 companies: Some were full audits, some were random samples and some were focused on spouses only. Still, out of more than 211,000 dependents, 23,314 were removed because they were no longer eligible according to the plan. Most companies can expect to find 3% to 10% of plan members to be ineligible. In total, these firms saved more than $100 million, not to mention savings from potential costs should an ineligible member experience a serious illness and subsequent costly care, which companies are reluctant to try to recoup after the fact.

 

Why are dependent audits so popular with small and midsize organizations?

LT: Actually they are becoming more and more common with companies of all sizes, because health care costs are indiscriminately striking all. However, yes, we are seeing a substantial increase in small- and mid-market-sized clients, who say they have fewer resources to conduct the labor-intensive implementation, documentation, communications and data search. Plus, we provide tools that minimize disruptions and HR staff time, and ensure a quick, efficient, participant-friendly process.

One additional aspect that companies really like: They are looking for cost savings — and in particular, quick wins. In just four months, we can conduct a complete audit, and companies can come away with a substantial return on their investment.

In just four months, we can conduct a complete audit, and companies can come away with a substantial return on their investment.

  Contact us to learn more about how to save money through a dependent audit.
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