Question 1: Isn’t my enrollment vendor already verifying the eligibility of the dependents on our plan?
Question 2: When the average person looks under the hood of a used car, can they really tell if anything is wrong with it?
Answer to Question 1 and Question 2: Not Really
A large number of organizations are under the impression that their enrollment vendor is verifying the eligibility of the dependents on their plan. But this is a dangerous assumption. The problem with most of their verification processes is one of both consistency and thoroughness.
First of all, every enrollment vendor has a distinct process. Most of these third-parties only concentrate on college student eligibility and ignore the other categories of dependents. They are right to focus on the student population, because they typically represent between 35 and 50 percent of the ineligible dependents on a plan. However, their verification process is typically not sufficient.
For example, some third-parties only check for student status when a claim comes in to be processed. This doesn’t eliminate all of your risk, or your loss of administrative fees for dependents that don’t have a claim. And even when these third-parties do attempt verification, the process is not thorough. Most will only ask for the employee to call in and verbally verify that their child is still a full-time student. Some do in fact require a copy of the student’s schedule. Some third-parties then allow this “student” to stay on the plan for another 4 years without another request for documentation. If this process sounds questionable to you, you are correct. Only around 50% of college freshman actually have a degree 6 years later; a significant number drop out within one or two semesters. If you combine this relaxed verification process with the fact that most insurance companies and enrollment vendors don’t even attempt to verify any other types of dependents, you are very likely to be paying for dependents who are not eligible.
It might be time to find out exactly what your enrollment vendor is actually doing to verify dependent eligibility. You should take a look at the contract language and ask a few questions about how exactly their process works. If your experience is similar to most organizations, you will find an area that is in desperate need of attention.
