Depending on the type of plan you have, there are some things you will need to know about the requirements to verify dependent eligibility. But, again, this will help you avoid a potential future problem.
Documents Required
Adding a new dependent to your family plan requires proof of eligibility through dependent eligibility verification. You may be required to provide documents such as a tax return or a canceled check. In addition, you may be asked to show evidence of regular substantial contributions.
You must provide proof of their eligibility to ensure that you are only paying qualified people to receive benefits. The best and most efficient way to do this is to complete the affidavit form. If your partner is a dependent for tax purposes, you must only fill out pages three and four of the affidavit.
Amnesty Period for Ineligible Dependents
Employees can remove ineligible dependents from their plans during the amnesty period without penalty. During this time, they can also verify their dependents’ eligibility. However, employers may impose penalties or discontinue coverage of ineligible dependents.
A good rule of thumb is to offer an amnesty period of at least six weeks. This should give employees plenty of time to verify their dependents’ eligibility.
The ACA prohibits retroactively canceling coverage, so employers should check up on dependent eligibility during open enrollment. This will also provide them with the opportunity to recognize substantial savings. In addition, if you have a high staff turnover, you should check on your dependents’ status periodically.
A dependent eligibility amnesty is a great time to announce your coverage for your dependents. You may even recover insurance premiums that were paid for ineligible dependents.
In short, the amnesty period is a great opportunity to bring to light ineligible dependents and possibly save your health plan from bankruptcy. The best way to handle this is to set aside a month for employees to make declarations and verify their dependents’ eligibility. In addition, you can recover some of your insurance premiums by pursuing reimbursement claims for ineligible dependents. Lastly, consider a potential disciplinary action against an employee who includes ineligible dependents in their benefits.
Ensure Compliance with ERISA
Ensure compliance with ERISA with dependent eligibility verification audits. These audits can save companies money while ensuring compliance with federal healthcare regulations. Performing an audit can also help your company avoid costly fines and litigation.
A dependent verification audit involves looking at the dependents enrolled in your group health plan. Documents are required for each dependent. These documents include birth certificates, marriage certificates, legal documents establishing custody, and disability documentation. These documents can be difficult to navigate and read on an electronic device. A paper copy is easier to manage.
Before conducting a dependent verification audit, it is important to communicate the process to employees. HR and managers should be aware of the steps involved. It is also necessary to get buy-in from other parties. Some companies offer appeals procedures for ineligible dependents.
Depending on the situation, a company may terminate coverage for an ineligible dependent or seek reimbursement for claims paid for them. Employers also have the option of imposing penalties for ineligible dependents. Ultimately, removing ineligible dependents can translate into significant cost savings for employers.
Ensure Only Eligible Dependents are Covered
Ensuring only eligible dependents are covered is a cost-saving measure for employers. Healthcare costs are rising, so it is important to eliminate unnecessary costs. An audit of dependent coverage can identify ineligible dependents and reduce expenses.
The employer conducts a dependent eligibility audit to determine if an employee’s dependents are eligible for coverage. If dependents are ineligible, the employer can terminate their coverage. This may also mean that the employer seeks reimbursement for claims paid for ineligible dependents.
In addition to conducting an audit, employers can also implement penalties for employees who do not provide acceptable proof of eligibility. Some companies do not impose a penalty for an initial audit but may require penalties if a second audit is conducted. Some companies may offer an appeals process for ineligible dependents. In addition to ensuring only eligible dependents are covered, an audit can help employers find significant savings.
Whether an employer implements a spot test or a full audit, it is important to educate employees about the verification process and how they should respond. In some cases, employees have been caught using the identities of their dependents to get treatment for themselves, which violates the law. Keeping a record of how dependents are determined is a fiduciary responsibility of the plan. The plan documents should outline the process for determining dependent eligibility.
In addition to conducting an audit, an employer can ensure only eligible dependents are covered by offering photo identification cards for their dependents. This will prevent employees from misusing their dependents’ identities. An ineligible employee should receive a written warning about their responsibilities before being withdrawn from the plan. A spot test can also ensure that claims are paid correctly and that terminations are handled promptly. This will help prevent employees from slipping through the cracks. It is important to remember that the primary purpose of an audit is to ensure that only eligible dependents are covered. An employee ineligible for dependent coverage should receive a written warning about his responsibilities before being withdrawn from the plan.
