At the outset, employers should have two main objectives regarding their group health plan’s eligibility provisions: (1) drafting clear plans and policies to reflect their intended eligibility rules, and (2)administering and monitoring these eligibility provisions consistently. In order to achieve the second objective, an employer may want to conduct a dependent eligibility audit.
A dependent eligibility audit is an employer-initiated review of a group health plan’s eligibility provisions that identifies enrolled dependents who are ineligible for the plan. An employer may consider conducting a dependent eligibility audit for many reasons, however, the main purpose of the audit is usually to reduce healthcare costs. Also, employers are legally required by ERISA to follow the terms of the plan and administer their plan according to those terms. An eligibility audit will help employers act in the sole interest of their plan participants and beneficiaries by only providing benefits to dependents who are eligible for the plan. Employers who decide to implement a dependent eligibility audit will need to engage in careful planning and preparation.
Contact your Cowden representative for more information on this or other compliance issues.