University asking employees to verify dependents' benefit eligibility

Like many employers challenged by rising health care costs, the University of Colorado is launching an audit to verify the eligibility of dependents who are covered by employee benefit plans.

As announced by Payroll and Benefit Services (PBS) during spring's open enrollment for the 2009-10 year, plan participants must review the university's eligibility requirements and determine whether their dependents meet requirements for coverage by health, dental and life insurance plans.

All benefits-eligible employees will receive a letter this month explaining the process. In early February, all plan participants with enrolled dependents will receive a verification packet from Secova, an independent third party the university is partnering with for the confidential review. Participants will be asked for industry-standard documentation — such as birth certificates, marriage licenses and/or tax returns (without financial information) — verifying that dependents meet requirements.

"Although we believe the majority of enrolled dependents meet university eligibility requirements, there might be some instances when a plan participant mistakenly includes an ineligible dependent," said Mark Stanker, assistant vice president of PBS. "When this happens, each of us shares the cost of covering the ineligible dependent in our programs."

Plan participants who realize they have ineligible dependents are asked to voluntarily drop them from coverage in a timely manner. Penalties may be avoided by removing ineligible dependents from coverage by Feb. 28. After that date, if the university learns that a plan participant has knowingly enrolled an ineligible person as a dependent, the university may act to recover costs for the ineligible person's health care and/or benefit claims.

Dependent eligibility audits are increasingly common among employers as they seek to rein in health care costs. Other major universities including Stanford, Ohio State and Michigan recently completed similar dependent verifications. According to a recent Aon Consulting survey of large employers, 46 percent of organizations conducted such verification by 2009, and 20 percent plan to do so in the future.

"The data show that for large employers like CU, about 5 percent to 12 percent of dependents do not meet eligibility requirements, and each ineligible dependent costs an employer approximately $2,000 to $4,000 annually," Stanker said. "With nearly 18,000 dependents on our plans, assuring the university is paying only for eligible dependents is important, even more so in this economy."