Friends without benefits
By Claude Solnik
BridgeTower Media Newswires
LONG ISLAND, NY - After letting employees simply add the names of spouses and dependents to health insurance coverage, more firms are taking a Reagan-esque approach to policies: Trust, but verify.
They are asking employees to verify spouses' and dependents' status with birth and marriage certificates and tax return pages, to purge ineligible people from the health insurance rolls.
This can save companies hundreds of thousands of dollars, while requiring workers to prove something traditionally taken as a matter of trust.
"I was surprised," one employee said after being asked to provide documents proving dependents' eligibility. "I've been working here for 10 years. I told you, 'This is my wife.' I just took a woman off the street to give her health insurance?"
Another employee echoed that sentiment, saying she didn't expect to be asked to provide documents after completing the insurance application.
"If we have to prove that's our husband or our child, it's like they think I'm lying," another employee said. "I thought I was finished. Then I found out they couldn't get [coverage] until I proved we're related. I wasn't prepared when I signed up to have that material."
Managing verification can be tricky, since it means informing workers upfront, rather than alerting them with only days left to enroll.
But those in the insurance industry say verification has long been a best practice even if it hasn't always been done.
"Companies are spending millions of dollars on healthcare. They only want people on the plan who are eligible,' said Kevin Quinn, a partner at Chernoff Diamond & Co., a benefits consulting and risk management firm in Uniondale. "It's fair and reasonable to verify that they're dependents."
Quinn said simply adding names without monitoring the process is likely to lead to benefits for those who don't qualify.
"It's important for companies to make sure they're managing their eligibility process properly," he added. "A lot of money could go out the door, by having dependents on the plan that aren't eligible."
Domestic partners have long had to prove they qualify, showing they live together, with no verification of other relationships.
"They had to present all this evidence to prove they're domestic partners," Quinn said, suggesting that due diligence makes sense for others as well.
Insurers for many years accepted declarations at face value, rather than requiring proof.
"Quite often there was no check on it," Jeff Agranoff, chief human resources officer and human resources consulting principal at Grassi & Co. in Jericho, said. "You could put someone on as a dependent."
Insurance carriers more often are requiring documents, in part because costs to the individual and company can be the same regardless of the number of dependents.
"Insurance companies are concerned about dependent coverage," Agranoff added. "As healthcare costs rise, it's something the carriers are focusing on, but also companies as well. Companies are doing more investigative work as well."
Aetna spokesman Matthew Clyburn said companies are "generally responsible" for confirming dependents' eligibility. But its system tracks dependents' age.
Ex-spouses, children age 26 and older and children living in the employee's household who have not been adopted, nevertheless, sometimes are improperly declared as dependents.
"When a person gets a divorcee that's no longer an eligible spouse," Quinn said. "Sometimes, people keep their ex-spouse on the plan, because a court order says they have to provide them benefits."
Dependents may have different names than employees, due to second marriages or other circumstances, complicating verification.
"An employer ultimately verifies the eligibility of their employees and their dependents," Quinn added. "Surprisingly, a lot of people don't do that. All you have to ask for is a marriage certificate and birth certificate."
Henry Montag. principal of the TOLI Center East, an insurance consultant and broker, based in Melville, believes employers and insurers will continue to do more.
"People are costing the insurance companies money," he said. "One of the first lines of defense is to get rid of people who aren't eligible in the first place. I think there's going to be more and more of this as insurance takes a hit."
Some insurers are being more vigilant, seeking verification through payroll, birth or marriage certificates, according to Claudia McNally, vice president of benefits and claims at A & C Management Group, a health benefits and insurance firm in Great Neck.
But BMI Audit Services, based in South Bend, Ind., says "self-service online enrollment, lax eligibility vendor controls" and some plans' exclusion of spouses from dependent eligibility fuel a rate of 2 percent to 10 percent of ineligible dependents.
The average dependent costs an employer $3,000 annually, leading to hundreds of thousands of dollars paid to people who don't qualify.
BMI says it helped one firm audit 8,600 dependents to ensure they were eligible for benefits according to the plan.
The company says a 12-week dependent eligibility audit found 105 dependents, or 1.2 percent, failed to meet eligibility criteria at that firm.
The firm said its audit of claims and dependent eligibility for that company resulted in more than $500,000 savings in the first year.
BMI says a dependent eligibility audit of city government with 5,367 employees and retirees and 11,523 dependents found 263 dependents and retirees, or 2.3 percent, failed to meet plan requirements.
BMI said those included unreported divorces, failure to meet retiree subsidy requirements and dependents where employees did not have legal custody.
The firm also found 108 spouses with other coverage available should have been paying a spousal surcharge and 926 dependents and retirees did not complete or partially completed the audit requirements.
BMI said this resulted in roughly $1.2 million annual savings with a $3,500 annual cost per dependent and retiree.
If people are found to not qualify after obtaining care, hospitals can get caught in the middle.
"The provider is the one left holding the bag. Sometimes it's hard to chase the money," said Debra Silverman, a partner/director at Garfunkel Wild based in Great Neck. "I don't hear about it that much. I think the plans do a pretty good job."
Every process has problems along the way. Even though employees are told to erase financial information if they send tax return pages, not all do.
"I couldn't find my marriage certificate. I had to locate my tax return, take pictures of it and attach them to an email," one worker said. "A lot of personal information went along with that."
While providing documents takes time, most people get the same coverage that they would before verification was required.
"It's nice to have coverage," said one employee. "The whole process was cumbersome. Signing up was difficult."
President-elect Donald Trump and the Republican party have vowed to repeal or drastically alter the Affordable Care Act, but have said they support keeping dependents on policies under age 26 and insuring those with preexisting conditions.
If that age limit was removed, there could be a new wave of efforts to obtain coverage for people who don't qualify.
"I don't think they'll get rid of the 26," Quinn said. "The two things popular with Obamacare are no preexisting condition limitation and dependents until 26."
There's more of a push, though, to make sure that people aren't kept on policies beyond that golden number.
"People are keeping children on past 26," Agranoff. "Now carriers are often requiring that they provide backup."
He added that companies could be fined for listing people as qualifying for coverage when they do not.
"They gave people a year to practice. There weren't fines," Agranoff added. "This year, supposedly they will take action."
Published: Tue, Jan 17, 2017
