Thinking of doing a dependent eligibility audit to save money? Great. But you should also consider that a dependent eligibility audit is about more than just saving the money. Here’s why.
Accountability – Whether you’re a public or private company, a school, government entity, or a non-profit – you have stakeholders. And you have a responsibility to them to be wise and diligent about how you utilize resources. Organizations that have a culture of accountability – where everyone understands and takes an active role in the organization’s success will achieve greater results.
Ethics – Most organizations believe that they operate on a foundation of high ethical standards. Employees that are knowingly covering ineligible dependents are stealing money from your organization. That’s not ethical, and it might not be legal. Employees that are aware of this kind of abuse and misuse of organizational resources have an ethical obligation to not “look the other direction”.
Employee Contributions – There’s no doubt that your organization is paying claims for ineligible dependents – and this is costing you serious money. However, it is also costing those covered under your health and welfare plans more money. As the overall costs increase, the financial burden that is incurred by each member tends to increase through higher copayments, higher deductibles, tighter limits, and higher payroll deductions. In essence, the plan becomes either less robust or more expensive….or both.
Compliance - In many situations, you or your organization has a legal obligation – a fiduciary obligation – for being diligent. This varies by the type of organization, your funding mechanism and your location. Just as as an investment adviser has a legal obligation to manage your money in your best interest (not theirs), you have a legal obligation to take care of the monies spent on health and welfare benefits. The monies should be used for the exclusive benefit of the plan participants. Spending money on claims for people that don’t qualify as a dependent is in conflict with this obligation.
