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Home / News & IndustryManaged Care Insight and Analysis
Updated: July 14, 2009
Mercer Sees Significant Growth In Health Plan Dependent Eligibility Audits

In the midst of unprecedented economic challenges and ever-increasing healthcare costs, Mercer is seeing a dramatic rise in the number of inquiries and new business involving health plan dependent eligibility audits, which are designed to verify the eligibility of dependents covered by an employer’s health plan.

Since 2006, the number of Mercer-conducted audits has more than doubled every year, with more growth expected this year.

The immediate and long-term savings gained from these audits can be substantial.

Mercer conservatively estimates that 3 to 8 percent of covered family members (spouses and dependents) cannot produce valid verification of eligibility during an audit. This can translate into significant costs for employers, with $1,900 being the average annual cost of providing health coverage for one dependent, according to an estimate based on data from Mercer’s National Survey of Employer-Sponsored Health Plans.

"Health plan dependent eligibility audits allow plan sponsors to identify ineligible dependents and then take action to ensure that only those dependents eligible for benefits are enrolled in a given plan. Particularly, with so many companies looking to cut costs any way they can, more and more are coming around to the fact that monitoring dependent coverage equates to sound financial management," said Dan Priga, national business leader of mercer’s performance audit group.

"Plan sponsors have a fiduciary duty to administer their health plan in the interest of eligible participants and their eligible dependents, known as the ‘exclusive benefit’ rule. So in addition to spending money on nonqualified participants, they risk running afoul of federal requirements as well as the Internal Revenue Code. Such negative outcomes can be avoided by the careful management of dependent eligibility," added Priga.

"Mercer applies a rigorous dependent audit process that involves strategic planning, detailed employee communications, and summary reporting," explained Rich VanThournout, health and benefits business leader for Mercer’s outsourcing business. "Because there can be employee relations challenges with an eligibility audit, Mercer also offers call center support and an intuitive employee Web site to help educate and support employees throughout the eligibility confirmation process. This approach helps ensure that dependent audits are as fair and effective as possible, while also helping to educate employees about rules surrounding eligible dependents and cost of care."

Address: Mercer, 1166 Avenue of the Americas, New York, NY 10036; (212) 345-7000, www.mercer.com.


  This article was taken from:
Directions: Looking Ahead in Healthcare

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