In the past few years, we’ve seen clients’ dependent verification initiatives serve as an effective cost-prevention tactic, as employers are able to safeguard against the high costs of covering ineligible dependents.
We’ve supported numerous audits that have demonstrated a significant financial ROI.
But, there are right ways to go about it, and there are ways that can turn employees, executives and trusted members of your HR, benefits team, and broker consultants into very cranky people you hardly recognize. The wrong approach can sour vendor relations, and it can lead to administrative headaches you’re better off avoiding. Going about it the wrong way will still save you money, but the exposure and erosion of good will and potential impact to employee productivity should give you pause.
Our best-practice suggestions can give you some insider pointers to help you verify dependents with the least amount of friction possible.
#1: Dependent audits are great…but not during Annual Enrollment.
Please don’t do it! This is our number-one piece of advice. We absolutely encourage you to do an attestation or audit, just not concurrent with Annual Enrollment. It may seem like bundling these two processes together would be efficient and effective, but we’ve found the bad greatly outweighs the good.
Why, you ask? First, you and your staff are likely already stretched thin…and so are your employees. Doing all the discovery, decision-making, prep work and communications necessary to successfully field a dependent audit on top of AE is more than most HR and benefits teams can or want to handle. Even the best-laid plans just do not work based on timing and the need to focus on AE alone.
With the typical several-week window of Annual Enrollment, locating necessary documentation is often something employees can’t accomplish quickly, adding stress to their AE experience.
Unhappy employees mean more calls to you or your call center, which creates more work for you in your busy season. An influx of disgruntled inquiries and escalations could be catastrophic to your workflow (or worse, your holiday season!) For employees calling a member services number, it can mean long wait times. All of this can be avoided.
Our advice? The best time to do an audit is the first or second quarter of the plan year after the dust has settled on Annual Enrollment. Give employees ample time to provide documentation—for example, one month—and drop any ineligible dependents prospectively. Retroactive termination is ugly, and it can cause significant hardship for employees and administrative headaches for you.
#2: An audit isn’t all or nothing; you can be strategic in who you ask for verification.
You can either approach a dependent audit with a blunt broad axe or a surgical blade. We recommend the latter. It’s much more precise and causes less pain—for everyone.
There are no rules that say you have to ask everyone covering a dependent for verification. Ditto for doing your whole population all at once. If you’re considering an audit, you likely have some sense where the problems are. Be strategic and focus on those areas. For example:
By limiting your audit scope, you cut down on the amount of communication necessary, the number of employees potentially impacted and any negative feedback or noise, while still getting results.
#3: Give yourself enough time for ample discovery, decision-making and executive buy-in.
Dependent verification isn’t brain surgery, but there are some complexities that you need to work through. A dependent audit is generally something executives have opinions about, so you need to make sure you have enough time and resources to do everything necessary to get ready, including running it up the proverbial flag pole.
This isn’t a process you want to oversee yourself, so getting in lock step with your support team is necessary. This potentially includes your broker, your administrator, your communications consultant and your carriers. You need a project plan, and you need a project manager who can help keep all the pieces moving in a timely way.
From an administrative perspective you’ll need to determine the requirements for verification. What documentation will be acceptable for each type of dependent? Will you do an affidavit in lieu of documentation? How long will employees have for the process? When will the clock run out for people who haven’t provided documentation, or those deemed ineligible? What will the communications look like, and when and how will they be sent? These are just a few of the details, which is why you need both time and expert guidance.
#4: If you’re not currently doing it, start requiring documentation for new dependents.
A long-service employee who’s been covering a spouse for a decade may feel differently about providing dependent verification than a new hire. For the first employee, it could feel like an intrusion. For the second, it’s just process. Requiring verification for new dependents helps keep ineligible dependents off your coverage, which means you prevent unnecessary costs. Ongoing verification like this saves money while avoiding the disruption of a full audit.
No employer wants to direct dollars that could be allocated to other things to coverage for people who don’t meet the eligibility requirements. Ensuring only eligible dependents are on the books makes good financial and administrative sense.
Dependent verification audits are a powerful money-saving tool, but there are some potential pitfalls that can undermine employee morale, give executives heartburn and erode productivity on your team. By avoiding these pitfalls and following some best-practice suggestions, you can field a successful audit and reap a significant financial return.
