"Dependent" Audits Are Becoming Increasingly Common By Employers

The Pittsburgh Post-Gazette reports that area employers are being conscripted into an effort aimed at controlling the rising cost of health care, called a dependent eligibility audit. If employees carry7 dependents on their health plan -- that is, a spouse, children or both -- they are asked to fill out verification forms and furnish some combination of tax returns, marriage certificates, mortgage statements, and copies of birth certificates so those dependents would be permitted to remain covered.

It may sound burdensome at best and vindictive at worst, but as many as one in 10 health insurance dependents, by some industry estimates, may be ineligible for the company health benefits they are receiving. Those unknowing -- or, in some cases, knowing -- freeloaders drive up the cost of providing care for employers, and can likewise drive up the cost of premiums and co-pays for the rest of the beneficiaries.

That's why more employers and health care buyers, looking to trim health costs where they can, are turning to dependent eligibility verification audits. And while the audits used to be the province of large and institutional employers, today, smaller businesses are able to use them, too. Employers like the audits because they are often able to help save on health care costs overnight without reducing benefit levels for employees. One in-depth study by the University of Colorado showed the return on investment for its own audit was 13 to 1, in the first year.

Now that the Affordable Care Act, including the individual mandate and health insurance exchanges, has been upheld by the Supreme Court, employers are under even more pressure to ensure that those who are eligible to be enrolled are, and those who are not eligible are informed of their other options to obtain insurance coverage.