Research report shows employers how a dependent eligibility program
can save money
Colonial Life & Accident Insurance Company, in partnership with the
Government Finance Officers Association, released Monday a new research
paper that shows employers they can save a significant amount of money
on their benefits costs simply by checking if their employees’
dependents are eligible for coverage.
Up to 8 percent of the dependents enrolled in an employer’s medical plan
are actually ineligible to receive benefits according to their plan’s
own criteria, according
to the study, “Controlling health-care costs with dependent eligibility
audits.”
For employers, providing insurance benefits for dependents who are no
longer eligible for coverage can be very expensive. Employers pay an
average of $3,500 annually to provide coverage for a single dependenti.
At this rate, employers can rack up big price tags in a hurry by funding
dependents who aren’t qualified for coverage.
Ineligible dependents subject employers to increased legal exposure.
There is heightened compliance risk associated with paying claims for
ineligible dependents, which is prohibited by federal law. In addition,
ineligible dependents assume they have coverage they actually don’t
have, which can create unpleasant surprises when they eventually learn
the truth.
The recent Colonial Life-GFOA study examined 17 local governments that
conducted audits in 2013. These included cities, counties and school
districts. The average number of ineligible dependents across all 17
governments was greater than 7 percent. The five largest jurisdictions
reviewed (which ranged from 3,500 to 7,500 employees) would be able to
save between $590,000 and $1.3 million annually by removing the
ineligible dependents.
In 2013, the City of Corpus Christi, Texas, was surprised to find that 9
percent of dependents covered by its health plans were ineligible for
coverage. Considering the national average-annual-price tag of roughly
$3,500 per dependent, the dependent eligibility audit resulted in the
City of Corpus Christi saving roughly $1.1 million in the first year.
The white paper is the latest in an ongoing series of research briefs
produced by Colonial Life to help position the company as a thought
leader in financial protection benefits, communication and enrollment.
About Colonial Life
Colonial Life & Accident Insurance Company is a market leader in
providing financial protection benefits through the workplace, including
disability, life, accident, dental, cancer, critical illness and
hospital confinement indemnity insurance. The company’s benefit services
and education, innovative enrollment technology and personal service
support more than 80,000 businesses and organizations, representing more
than 3 million of America’s workers and their families. For more
information visit www.coloniallife.com
or connect with the company at www.facebook.com/coloniallifebenefits,
www.twitter.com/coloniallife
and www.linkedin.com/company/colonial-life.
i $3,500 is an industry average that is based on research
conducted by the Kaiser Family Foundation and Mercer’s 2014 National
Survey of Employer-Sponsored Health Plans. The equation used for
calculating an organization’s actual per dependent premium is as
follows: HC Claims $ Per Year + RX Claim $ Per Year + Admin Fees / Total
Number of Lives Covered by the Plan = Per Dependent Premium.
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