Increasingly, employers are using dependent eligibility audits to weed out working spouses that have access to health care coverage from another employer.
As health care costs continue to increase, employers looking for opportunities to cut their expenses are implementing working spouse provisions that either eliminate or increase the premium for insurance coverage for any spouse with health care coverage available through their own employer.
When properly administered and monitored, these provisions can mean sizeable savings according to HMS, a company that conducts audits for businesses.
To successfully implement the provisions, employers are using the audit process to accurately identify spouses who have access to their own coverage.
This can be conducted as an add-on to a dependent eligibility audit or as a standalone audit and can also be integrated into a larger ongoing dependent audit process.
For each ineligible dependent found, savings can add up to more than $3,000 per year in premiums and future costs, according to HMS. Dependent Specialists Inc. (DSI), another audit service company, estimates those savings could be closer to $5,000 per ineligible dependent per year.
The spousal surcharge provision allows employers to charge a higher premium when working spouses choose to stay on their husbands or wifes plan instead of taking their own employers coverage. The spousal carve-out provision removes any working spouse who has health care coverage available through their own employer.
By eliminating coverage to spouses, employers not only save the annual premiums, but also the new fees that went into effect as part of the Affordable Care Act. In 2013, companies had to pay $1 per life covered on their plans, a fee that increases to $2 per life for plans ending Sept. 30, 2014.
In 2014 about 12% of employers plan to exclude spouses from health care coverage, up from 4% in 2013, according to a recent Towers Watson survey.
The United Parcel Service in August became one of the largest employers to eliminate health care coverage for working spouses. The company dropped coverage for 15,000 employees spouses who can obtain health coverage through their own jobs. UPS said the change was intended to offset the effects of the ACA, which were expected to increase its health care costs by 4%.
HMS, says it has found that between 7%-12% of spouses on a plan are not properly recorded as having access to other coverage.
As the result of one audit conducted for an international oil and gas company, for instance, HMS found 114 spouses who opted to pay a $200 a month surcharge to remain on the companys health plan and 57 spouses who left the plan, for a total annual savings of $444,600.
While some benefit advisers offer dependent audit services, many use third-party audit services or direct their clients to use one.
Companies like DSI will partner with benefit brokers, offering them preferred rates, conducting their audits behind the curtains and act as a cost-containment partner, maintaining the ongoing cleanliness of a benefit pool.
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