What is a dependent eligibility verification?
A Dependent Eligibility Verification (DEV) is simply the process by which you verify the relationship between the participant and their dependents to ensure they should in fact be eligible for coverage.
Most participants do not intentionally carry ineligible dependents, they simply do not understand plan rules.
When we complete a dependent eligibility audit or verification, we ask employees to provide documentation or proof that their dependents meet the requirements set by the plan to be covered.
Why you should complete a dependent eligibility verification (DEV) audit?
1. Financial benefits
In Mercer’s experience providing dependent eligibility verification services, we have found the average annual incurred medical cost per dependent exceeds $4,570 with 3% - 10% dependents removed.
As an example, if you evaluate a plan with 1,000 dependents, and assume 5% of dependents are identified as ineligible, savings are estimated to be $228,500.
Related: When was the last time you saw a 6,000% ROI? Check out this case study which highlights the results from a recent dependent eligibility verification (DEV) audit.
2. Fiduciary obligations and ERISA compliance
Most employers have a fiduciary responsibility to ensure that their plans operate according to the terms in the plan documents, including enrollment and eligibility provisions. Eligibility verification procedures can help minimize legal risks.
3. Improved communication and accountability
A verification program facilitates a proper understanding of who is eligible under a group health plan. This learning process increases employee accountability for their benefit elections.
4. Fewer denied insurance claims
Regular eligibility verification can minimize concerns about insurers and stop-loss carriers refusing coverage for medical expenses of ineligible dependents.
5. Fewer tax issues
A verification program can help identify and minimize exposure for tax reporting violations.
6. Sarbanes-Oxley compliance
Verifying eligibility addresses implications for financial controls and anti-fraud provisions under Sarbanes-Oxley.
What does a dependent eligibility audit look like?
Dependent eligibility verification’s can be done in house or by an external partner, such as Mercer. Audits performed in house vary significantly in scope and time commitment depending on the number of dependents you have covered.
If you use an external partner to assist you with an audit, your time and effort is minimal.
As an example, when Mercer performs an audit, we have a specialized, service team that handle the process from start to finish. We communicate requirements to participants, provide access to an easy-to-use web portal to upload required information, review all documentation received by dependents, and provide support to employees through our live contact center, trained specifically on the dependent verification process. We act as an extension of your HR department, which frees up their time to focus on larger business initiatives.
Throughout the process, we provide weekly meetings to discuss program progress and unique participant circumstances. When the audit is complete, we provide a summary report that encompasses audit findings, dependent removal rate and client-specific ROI data.
We also provide best practices and guidelines for ongoing maintenance of dependents post-audit.
We know that there isn’t a one-size fits all approach, so we work with our clients to identify the parameters for the audit and make a plan that works best for them.
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