The U.S. Department of Labor (DOL) has been quietly talking about ACA compliance, which means dependent verifications aren’t far behind. As far as compliance goes, the DOL wants to ensure that coverage is available to dependents up to age 26. However, dependent verifications go beyond that to verify that group plans comply with ERISA. They also help companies get a more accurate picture of current and future health insurance costs as they decide whether to “pay or play” under ACA.
“ACA compliance is a real concern,” said Meghan Sullivan, Managing Partner, Sullivan, Hayes & Quinn. “Dependent verifications should be carefully conducted to ensure all provisions of the ACA are met.”
Larger groups tend to find inconsistencies in their employees’ dependents – but that doesn’t mean smaller groups shouldn’t conduct dependent verifications. Employees may not always know that their spouses or other dependents aren’t eligible for coverage. Here are a few examples:
- An employee enrolls her boyfriend as her spouse
- Children aging out at age 26 but inadvertently left on plan
- An employee enrolls his niece who is living with him as a “child”
- A divorce has occurred, but the spouse is accidently left on the plan
To conduct the verification, employers must require each employee to complete the dependent verification form and attach copies of the appropriate documentation. Often, companies will conduct these verifications at the same time as open enrollment, which makes it easier for employees to remove dependents without worrying about repercussions.
It is also helpful to have the verification available in multiple languages, where applicable.
When employees can’t produce the documentation, or when employees realize that a dependent on their plan isn’t eligible, the employer has the right to terminate the coverage. Employers typically remove dependents from the plan prospectively and must also provide resources for insurance for those dependents that will be removed, especially if the dependents are 18 and older.
“Ineligible dependents do have options, but it may be difficult to help them identify them,” said Bill Trudeau, CEO of ICNE. “We work with a variety of providers and can help dependents find a plan that suits their needs.”
The verification typically takes anywhere from 30 to 90 days for implementation, the verification process itself, appeals, and removals. Because of the time involved and amounts of paperwork an audit includes, some employers may prefer to outsource their audits. ICNE can recommend providers.
Finally, once the audit is complete, employers will want to implement an ongoing maintenance program. This will help identify eligible and ineligible dependents, keeping the list “clean” and fostering compliance.
Ultimately, dependent audits can be sticky subjects. However, they are necessary to ensure compliance. A well-conducted audit will remove ineligible dependents; assist with ERISA compliance and save money. Contact ICNE today for guidance and sample forms.