Dear HR Executive,
What do you – and your employees – hear when somebody says “health plan eligibility audit”?
It’s the latest hot trend being pushed at employers – largely by those who do the audits – as a way of restraining employee health care costs.
Essentially, in an audit you go over your plan rolls with a microscope, looking for employee dependents who shouldn’t be on there. Or if you’re a bigger company, you pay somebody to come in and do it.
Health care costs reduced as promised
Advocates, such as Mercer Consulting, claim that employer health care costs are reduced by $1,900 each time they find one dependent who’s covered but shouldn’t be. Other audit consultants claim that companies find between 5% and 12% of those enrolled fall into this category.
Experts say it’s relatively rare to find outright fraud.
Most times, either the employee didn’t understand the terms of coverage, or the situation of the dependent has changed so that he or she is now ineligible.
That’s often the case with 20-somethings who were covered while in their teens, but now either aren’t in school or have recently graduated. (Note: Some states now require health plans to continue covering these young folks through their late 20s.) Or with ex-spouses who are no longer entitled to coverage but are still on the plan.
Sometimes it’ll be a case of dependents whose ties to the insured employee aren’t close enough to qualify for coverage – like that sickly uncle who lives with the family, or even stepchildren, who may not be eligible under some plans.
Rules are rules
Well and good. Rules are rules, and if you can save meaningful bucks by making sure they’re adhered to, why shouldn’t you?
The problem is simply this: Is the money you’re going to save worth the potential alarm, discontent and resentment that employees may feel, knowing they’re being “audited” – something they will likely interpret as a reduction in their benefits?
After all, you’re probably already concerned about employee motivation and engagement at a tough time like this. Do you want to do something that will loosen the strings of commitment that tie people to the organization?
Clearly not.
What’s in it for them?
That’s why if you’re going to do a full-fledged health plan eligibility audit – or just go poking around yourself for ineligible dependents – it’s a good idea to link it with this powerful idea: Any health care costs you save will either help you avoid premium hikes to employees in the future, or reduce their severity.
This isn’t just blarney: According to consultants Watson Wyatt, companies that have done eligibility audits over the past three years say they’re less likely to raise employee co-pays or premium contributions, or place further restrictions on eligibility.
So sure, make certain you’re not insuring people you shouldn’t be – but let employees know what’s in it for them.
Dave Clemens
Editor-in-Chief
The HR Café Newsletter
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