Article

Dependent verification: The 'treat' is the 'trick'!

Oct. 17, 2024 · Authored by Eric Pochas

The employer act of verifying dependent eligibility for benefits has gained traction in recent years. Once a measure only taken by the largest employers, this type of verification is now practiced by employers of all sizes. Though now more commonplace, the process still tends to be viewed as anything but a “treat” among employees. The “trick” is to invest in a well-thought out and balanced approach.

At its core, dependent verification makes for a sound practice that supports overall fiscal responsibility. At a roughly estimated average annual cost of upwards of $5,000 per dependent, employers are motivated to limit enrollment in their benefit plans to only those eligible by rule. According to the International Foundation of Employee Benefit Plans, small percentages of plan sponsors cover grandchildren (6%) and nieces or nephews (1%). A new employee who comes to work for your company may naturally assume this is your practice too.

Therein lies the first priority: educating employees on dependent eligibility. This includes being clear on how your organization defines it and why it is important. It also includes identifying what information (documentation) must be provided as well as the when, the how and what happens when you don’t. Being descriptive and using charts and examples are exceptional ways to go about connecting these dots.

Other key strategic considerations include:

• Consider amnesty as a call to action. The intent behind a pre-audit amnesty period is to cut down the low-hanging fruit. This would come in the form of an employee who recently divorced a spouse but failed to remove said spouse from coverage. But the amnesty period also has other meaningful effects. It proves to employees that you are serious on this subject — that it’s really happening. It also gives employees the benefit of time for gathering their documents. Not having enough time to gather documents is high up there in the list of complaints made by employees.
• Determine who will do the work. Verifying dependent documentation is a labor-intensive process. The workload amplifies during open enrollment when a fresh crop of dependents is potentially added to coverage. Make sure you have a way to stay on top of this task. It is also essential to have a secure way of storing documentation and tracking it through the review and verification steps. Many organizations outsource this responsibility for these reasons.
• Know your end game. What consequence will you tag to not completing the verification process? If you already enrolled these dependents, keep in mind that terminating this coverage may violate the Affordable Care Act’s prohibition on recissions of coverage unless the cancellation is processed on a prospective basis. Less risky would be not enrolling any dependents until the verification process is complete.
• Be (extra) considerate of your disabled population. Proof of disability is often practiced even when dependent eligibility is not being verified on an overall basis. If your organization is planning to perform a wholesale audit, you may want to consider excluding disabled dependents from this initiative if proof of a disability was solicited within the past year. Otherwise, you risk firing up a subset of employees who are very already familiar with this type of process because they’ve already been there and done it.
• Don’t rush it. If you’re running a full population audit with an intent to change your enrollment requirement for all going forward, make sure your audit support team is flexible enough to allow you the benefit of time to achieve your audit participation goal. It’s important to assess your progress and be able to adjust for any discovered factors that may be learned as you go. An example of this would be language or translation barriers that may necessitate more time and attention to manage.

When done right, dependent verification takes a fiscally sound concept and enables it in a way that employees are willing to accept and engage in because they understand reasoning behind it.

Baker Tilly Vantagen's benefits administration practice supports dependent eligibility verification, both as an engrained element of benefits enrollment, as well as on a standalone basis.