What Is a Dependent Eligibility Audit?
A dependent eligibility verification audit is a systematic review of all dependents enrolled in an employer-sponsored or Taft-Hartley benefits plan to confirm they meet eligibility requirements. Employers often discover that ineligible dependents—such as ex-spouses, over-age children, or unqualified individuals—are mistakenly receiving benefits, driving up healthcare costs.
A well-executed audit ensures that only those who truly qualify for coverage remain on the plan, preventing unnecessary plan and subsequent claims expenses while promoting fair distribution of benefits. David Alexander, president of Part D Advisors who specializes in audits, stated “Dependent audit verification is a great way to bring additional value to clients as a stand-alone solution or as a part of your overall comprehensive benefits program approach.”
Why Conduct a Dependent Audit?
Conducting a dependent audit is a highly effective strategy to lower healthcare costs, ensure compliance, reduce fraud, and sustain benefits plans. Additionally, ERISA and other regulations require employers to only insure eligible plan participants, making audits a necessary compliance measure and important for company tax liability purposes. Beyond cost savings and compliance, audits help maintain fairness. Employees who rightfully qualify for benefits should not bear the burden of higher premiums due to ineligible participants driving up costs. Alexander shared, “Ensuring only eligible individuals receive coverage promotes long-term sustainability and responsible benefits management for the company and ultimately benefits its employees.”
How Easy Is It?
Many employers hesitate to conduct audits due to concerns about complexity, employee pushback, or administrative burden. However, if you engage an experienced partner such as Part D Advisors, they proactively manage the entire process from initial communications to final verifications. “It's vital employees have ample response time and multiple submission options, including secure online portals, mail, and in-person drop-offs, making compliance easy,” shared Alexander.
Common Reasons for Ineligibility
Understanding why dependents may become ineligible is crucial. Some common scenarios include:
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Divorce or Separation – Ex-spouses are often mistakenly left on plans when coverage should be discontinued.
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Employment Changes – Spouses who gain employer-sponsored benefits elsewhere may no longer qualify under a company plan with a spousal carve-out rule.
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Non-Qualifying Relationships – Some employees mistakenly enroll nieces, nephews, or other family members who do not meet the plan’s definition of an eligible dependent.
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Lack of Documentation – Employees may not have the required legal documentation to prove dependent status, such as marriage or birth certificates.
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Aging Out – Most plans cover children only up to age 26, after which they must be removed unless otherwise qualified.
Implementing a Dependent Audit Verification program is an easy way for agents to offer value-add services to strengthen relationships with their existing and potential employee benefits clients. Alexander cited, “Part D Advisors has a track record of saving clients an average $19 for every $1 invested in our dependent audit program.”
Overcoming Employee Concerns
One of the biggest hesitations in conducting dependent audits is fear of negative employee reactions. However, with a well-structured approach, audits can be conducted with minimal friction. The key is proactive education. Employees should be informed early about the audit’s purpose and how it benefits everyone involved.
Providing ample time for response, offering multiple submission methods, and ensuring confidentiality all contribute to a smooth process. An amnesty period before the audit allows employees to voluntarily remove ineligible dependents without penalty, reducing resistance and improving cooperation.
The ROI of Dependent Audits
Dependent audits generate a strong return on investment by identifying and removing ineligible dependents, reducing unnecessary costs, and promoting sustainable benefits administration. On average, organizations that conduct audits recover 3% to 10% of their total healthcare spending—savings that can be reinvested into better benefits, lower premiums, or business growth initiatives.
Furthermore, audits help prevent financial losses associated with fraudulent claims. By making sure that only real dependents get coverage, employers can keep a stable benefits program. This also helps reduce legal risks and compliance issues.
Best Practices for Conducting a Dependent Audit
To achieve the best results from a dependent audit, consider the following best practices:
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Schedule Regular Audits – Conduct audits every three to five years to maintain accuracy and compliance.
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Communicate Proactively – Inform employees well in advance to avoid misunderstandings and resistance.
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Use a Trusted Third-Party Provider – Working with an experienced firm ensures accuracy, efficiency, and an employee-friendly approach.
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Provide Ample Support – Have a dedicated, human driven support team available to answer employee questions and resolve concerns.
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Review Plan Documents Regularly – Clearly define dependent eligibility criteria in all enrollment materials and benefits documentation.
How Often Should You Conduct a Dependent Audit?
Best practices recommend conducting dependent eligibility audits every three to five years, with continuous monitoring in between. Regular audits prevent the buildup of ineligible dependents and ensure compliance with plan rules. In addition, implementing a verification process during open enrollment can help maintain accurate records year-round.
Take Action Now: Protect Your Client’s Plan & Save Them Money
Dependent audits are an essential tool for reducing healthcare costs, maintaining compliance, and ensuring that benefits are distributed fairly. If your client or company has never done an audit or if it has been over three years since the last one, now is the time to act.
Let Accretive’s team of Dependent Audit Verification specialists at the industry-leading Part D Advisors handle the process so your client can focus on running the business while reaping the cost-saving benefits. Submit an inquiry form below to be put in touch with one of our team members for an estimate of your client’s potential ROI.
