Is a Horse on Your Employee Health Plan?

School Solutions

As a firm that specializes in conducting dependent verification projects on employer health plans, we found a horse being represented as a child in order to cover prescription medications. While this is an amusing anecdote, I realize the “Mr. Ed thing” is an outlier event.

Yet, there is a similar problem lurking about that warrants priority attention. It is likely that your district is covering ex-spouses, sisters, brothers, grandchildren, nieces, nephews, boyfriends and girlfriends just to name some possibilities.

Does your organization check the eligibility of all dependents added to your health plan? A thorough process includes verifying those currently on the plan as well as those added in the future. It should also include re-verifying that marriages are still intact every two to three years. If your school district is not doing all of these things, it is extremely likely that ineligible individuals are walking around with an insurance card they aren’t supposed to have, financed by large contributions from your district’s budget (and, by transitive property, taxpayers). Let’s not forget to mention the contributions of your hard-working employees every pay period. 

While most organizations typically do something to verify dependent eligibility, more often than not, it is not the holistic approach described, which leaves holes for horses and other surprises to slip through.

Costs of Ineligibility

How big is this problem? 

A public school system employee health plan in Virginia was covering 5,440 dependents; 278 of those dependents (5.1 percent) were found ineligible with a resulting projected savings of nearly $1.3 million per year. Similarly, a community school system in Indiana was covering 367 dependents, and HMS found 47 of these people were not eligible for coverage. This projected to savings of over $130,000 per year. 

As you can see, whether your health plan is the size equivalent to a miniature horse or a giant Clydesdale, the benefit of a dependent verification is significant.

Enhancing the priority level of doing this are the benefits that go far beyond savings. Compliance and reduced risk cannot be underestimated. What happens when a dependent incurs large claims and ineligibility is discovered after the fact? Financial issues. Public relations issues. Potential legal issues. All of these could have been avoided by conducting a simple verification project sooner rather than later.

Consider that the process takes around 100 days from start to finish, the heavy lifting is handled by a third party, like HMS, and the return on investment on the fee is usually 500 percent or more. The decision to do this should be easy.

Verifying dependents doesn’t have to be an onerous task. To hire and keep great talent, a district must offer exceptional benefits. Dependent verification has become a critical part of this strategy for many employers. Making it a big part of the care and feeding of your employee’s health plan just makes good horse sense.