The rate of ineligible dependents increases with health care reform

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September 8, 2011

One of the first (and most popular) changes brought on by health care reform was the mandatory extension of health plan eligibility to adult children up to age 26 regardless of student status or dependence upon the employee. Most people predicted that the rate of ineligible dependents would decrease after this provision took effect. Based upon a study my firm recently completed, comparing similar populations before and after the implementation of this provision, we can…


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26 Comments

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Posted by: antic h | September 6, 2012 3:16 PM

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What percentage of the post Health Care Reform ineligible dependents failed the relationship test?towing darling point

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Posted by: djmax 2 | August 26, 2012 3:56 AM

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Sure, there are some dishonest employees, but we prefer to believe that most situations involving ineligible dependents are due to lack of understanding. topes para estacionamiento

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Posted by: my d | August 11, 2012 7:15 PM

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With the changes brought on by health care reform, this verification process was no longer relevant, thus eliminating the only stopgap against ineligible dependents.restaurant mats

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this verification process was no longer relevant, thus eliminating the only stopgap against ineligible dependents. hermes birkin

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With the changes brought on by health care reform, this verification process was no longer relevant, thus eliminating the only stopgap against ineligible dependents.trampolines for sale

Posted by: Adam J | August 7, 2012 11:02 AM

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Frustrating, but they are not motivated to comply. That really throws off the numbers and makes it appear we have dishonest employees."smarsh

Posted by: Adam J | August 4, 2012 5:07 AM

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Sure, there are some dishonest employees, but we prefer to believe that most situations involving ineligible dependents are due to lack of understanding. smarsh

Posted by: Adam J | August 4, 2012 5:05 AM

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In the post health care reform era where even more dependents are eligible, the exposure risk of covering ineligible dependents is more significant than ever.forex trading strategies

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With the changes brought on by health care reform, this verification process was no longer relevant, thus eliminating the only stopgap against ineligible dependents. https://www.1blick.de/wohngebaeudeversicherung-vergleich

Posted by: antic h | July 24, 2012 7:23 AM

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When an employer engages us to do this advance verification, they typically identify significant additional savings.best HCG drops

Posted by: Adam J | July 23, 2012 5:29 AM

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We emphasize education in our projects. Sure, there are some dishonest employees, but we prefer to believe that most situations involving ineligible dependents are due to lack of understanding. best HCG drops

Posted by: Adam J | July 23, 2012 5:28 AM

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I am sure some parents "are not motivated to comply", our experience in over 400 projects is an average response rate of 97%. smarsh.com

Posted by: antic h | July 23, 2012 2:26 AM

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The percentage of ineligible dependents above age 26 increased from its pre-health care reform levels of 29% to a post health care reform 40%.pisos para gimnasio

Posted by: justin b | July 16, 2012 12:25 PM

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Just a couple of clarifying points based upon the posted comments. Our firm has conducted over 400 Dependent Eligibility Verificaton projects and the results surprise many industry veterans.

Perception: "I would assume and hope that most employers have stops in place to prevent children over age 26 from being enrolled."

Fact: Prior to the passaage of health care reform, 78% of organizations we surveyed stated their only dependent eligibility verification practice was for full-time student status. Once health care reform was passed, this practice was eliminated.

Perception: "The increase could be due to so many factors: dependent spouses that are no longer eligible due to divorce or eligibility for medicare, or those who finally found a job and now have their own group coverage. Or perhaps some of these adult children got married."

Fact: Many people don't understand the dependent eligibility rules of their own plans. Eligibility for Medicare does not change group eligibility. Neither does marital status of children. In our experience, misunderstanding leads to "under-enforced" eligibility.

Perception: "However, as someone who is responsible for conducting these audits at my organization, I can tell you that a lot of parents simply won't go to the trouble get their child's birth certificate since they don't really need the coverage. I've been told over and over that they just enrolled them at open enrollment because they could, but they don't really care if they drop off. Frustrating, but they are not motivated to comply. That really throws off the numbers and makes it appear we have dishonest employees."

Fact: A properly executed Dependent Eligibility Verification project should have response rates greater than 95%. While I am sure some parents "are not motivated to comply", our experience in over 400 projects is an average response rate of 97%. We emphasize education in our projects. Sure, there are some dishonest employees, but we prefer to believe that most situations involving ineligible dependents are due to lack of understanding. This results in a project with maximum compliance with minimal operational disruption. In any case, these ineligible dependents are removed and the excess cost and compliance risk is removed as well.

Summary: The initial posting was not intended to be an exhaustive report on the problem of ineligibile dependents. Rather, it was intended to provide evidence to refute a common misperception - that with the passage of healthcare reform, the problem of ineligible dependents went away and plan sponsors can relax. Unfortunately, this is not true. Prudent employers should increase their efforts (or get some help) to eliminate the excess expense and compliance risk associated with ineligible dependents. It is still a problem - now more than ever.

Eric T. Helman

Posted by: Amy D | September 13, 2011 6:45 AM

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The category "dependent over age 26" is way too vague. The article doesn't state if they are specifically referring to dependent children or any dependent category. The increase could be due to so many factors: dependent spouses that are no longer eligible due to divorce or eligibility for medicare, or those who finally found a job and now have their own group coverage. Or perhaps some of these adult children got married. I would have to see a much more detailed study to draw any conclusion from these numbers.

Posted by: Melony Y | September 12, 2011 3:33 PM

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The statistics give me the impression that it's spouses who are failing the dependent audits. I would assume and hope that most employers have stops in place to prevent children over age 26 from being enrolled. I think the author is onto something, stating that it's the bad economy causing employees to fudge the truth.

However, as someone who is responsible for conducting these audits at my organization, I can tell you that a lot of parents simply won't go to the trouble get their child's birth certificate since they don't really need the coverage. I've been told over and over that they just enrolled them at open enrollment because they could, but they don't really care if they drop off. Frustrating, but they are not motivated to comply. That really throws off the numbers and makes it appear we have dishonest employees.

I don't see a way enrollment in other plans could be monitored. That's why our plan doesn't exclude individuals based on that criteria, even though healthcare reform says we can.

Posted by: Sandra S | September 12, 2011 2:08 PM

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Jeff,

Thanks for your comment. Our typical engagement involves verifying the "relationship" of the dependent as a means to evaluate their eligibility. In some limited cases, an employer can also limit eligibility based upon the eligibility for another Group Health Plan. We see this most typically used for employed Spouses or overage dependents (but only when the employer has a Grandfathered plan). We have developed an approach to help employers audit for this. On average, we find that only about half of the people in one of these situations is accurately enrolled in the plan. When an employer engages us to do this advance verification, they typically identify significant additional savings.

Eric T. Helman

Posted by: Amy D | September 12, 2011 2:06 PM

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What percentage of the post Health Care Reform ineligible dependents failed the relationship test?

Could it be that employers revised their eligibility policies to eliminate eligibility of dependent children over age 26 after Health Care Reform?

Or did employers audit their eligiblity and remove more ineligible dependents over age 26 as a result of Health Care Reform?

Posted by: Pat O | September 12, 2011 1:59 PM

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It appears that this article is only addressing the ineligibity of dependents due to age. What about those who may be eligible for another group plan (thus ineligible for their parents plan) but choose the less expensive or better coverage plan one of their parents have? The eligiblity for another group health plan is not being policed. How would an employer audit this?

Posted by: Jeff K | September 12, 2011 1:08 PM

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