In today’s environment of rising health care costs, employers are searching for ways to decrease their expenses. One method is the dependent eligibility audit (DEA).
A DEA occurs when an employer examines its health and welfare plans to determine whether all enrolled participants are eligible for benefits under that employer’s plan. According to one large health care broker, typically 5% to 7% of dependents on the employer’s plan are ineligible for benefits.
When an employer conducts an audit, an auditor reviews the employer’s group plan and looks for any dependents who lack documentation in the employer’s file. These can include noncustodial grandchildren, young adults older than 26, and ex-spouses. If they flag your name, auditors may request marriage certificates, birth certificates, tax returns, adoption papers, or other documentation.
In one case, an employer found a claimant ineligible after a divorce. Before the company audited, he had accrued thousands of dollars in medical payments under his ex-wife’s plan. The health care insurer can demand repayment in a case like this.
If you face a DEA inquiry, respond quickly. Your company will normally allow 30 days or so for you to gather documentation, but do not miss the deadline. If you have primary coverage like Medicare for your spouse, for example, you can be held responsible for returning monies paid under your own group plan. To avoid facing reimbursement demands, review your company’s eligibility requirements to ensure all your dependents meet its criteria. If in doubt, schedule a meeting with the human resources person responsible for benefits. While it’s hard to lose coverage for someone you love, facing thousands in medical bill repayment if your loved one is ineligible for coverage can be disastrous.
If you’re getting divorced, larger employers offer COBRA coverage, which allows the ex-spouse to purchase group coverage for up to 18 months by paying the whole premium. If you face a loss of coverage, contact your health insurance agent, who can offer short-term health plans if needed.