Dive Brief:

• For employee benefits leaders, managing dependent eligibility can be challenging because often an employer is paying insurance premiums for unqualified dependents, according to an article at Employee Benefits Network.
• Author Gregory Andrews, a senior vice president at Corporate Synergies, estimates that his firm sees that 4% to 8% of dependents enrolled in group employee health insurance plans are ineligible.
• He writes that one major factor leading to this result is a change in a person’s situation — for example, children reach the age of 26, spouses get jobs, people get divorced, etc. — and the employees do know realize they must let employers know. Or, an employee may interntionally lie about someone's dependent eligibility status.

Dive Insight:

Employers with even a few hundred employees may spend up to $2 million a year on health insurance, so ineligible dependent “leakage” can start to become a significant issue, Andrews writes.

To avoid this scenario, Andrews recommends employers follow eligibility "best practices," mainly audits, either done internally or by an outside firm. He suggests that employers communicate to employees checking on dependent eligibility is mandatory, with surveys conducted by phone asking workers to provide documentation as a follow-up. Andrews writes that some employers, depending on workforce size, will conduct random sample audits of 5% to 10% of the employee population.

In any case, he writes, dependent eligibility audits should be "handled with finesse" for the good of the employer's culture.