Benefits Eligibility Audits w Presented by: Peg Heinen & Suzanne Dorszynski Human Resource Business Partners MRA‐The Management Association MRA 2016...
Benefits Eligibility Audits w Presented by: Peg Heinen & Suzanne Dorszynski Human Resource Business Partners MRA‐The Management Association MRA 2016 HR Conference
Benefit Eligibility Audits Has your organization conducted a Dependent Eligibility Audit?
MRA 2016 HR Conference
2016 MRA HR Conference - Session 2A
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Benefit Eligibility Audits
Overview Objectives/Concerns Planning Phase Communication Phase Audit Process Audit Results/Consequences Executive Summary / Return on Investment Analysis Future Processes Internal versus External
MRA 2016 HR Conference
Overview: Why bother with an audit? Eliminate excessive health plan costs Limit exposure for your health plan Realize substantial and immediate long‐term savings How likely is my employer going to realize savings? How do those savings compare to the cost of performing the audit?
MRA 2016 HR Conference
2016 MRA HR Conference - Session 2A
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Overview: Where do you start?
Do you have senior level support? What plans should be audited? How many spouses/dependents are enrolled? How long should the audit take? How to we handle undocumented dependents? What is the ROI? Who will perform the audit?
Concerns Time and effort required Massive amounts of documentation
MRA 2016 HR Conference
Concerns Common Potential Ineligible Dependents Unknown divorces Over‐age dependents / incorrect birth dates Not legally married ‘spouses’ Grandchildren or other extended family dependents under no legal guardianship MRA 2016 HR Conference
2016 MRA HR Conference - Session 2A
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Concerns Common Potential Ineligible Dependents Unmarried partners with no recognized relationship under the Plan Carveout/Surcharge plans where spouse is eligible for own benefit
MRA 2016 HR Conference
Planning Design 1. Amnesty Period Voluntary removal without consequences
2. Verification Period 3. Appeals Period
MRA 2016 HR Conference
2016 MRA HR Conference - Session 2A
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Planning Phase Review all SPD and Plan documents Definition of spouse/dependent
Create “Document Requirements” Form Page 1 of IRS 1040 Federal Tax Return is critical Blackout SSN’s and dollar amounts MRA 2016 HR Conference
Planning Phase
Determine communication preferences Identify contact person Determine timing of an amnesty period Set period of time for verification period Insurance carrier / Stop Loss carrier considerations
MRA 2016 HR Conference
2016 MRA HR Conference - Session 2A
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Communication Phase What is your consistent company message? Plans are underway for a benefits audit designed to ensure that the individuals enrolled in our medical plan as dependents and spouses satisfy our plan’s eligibility requirements. The company has a responsibility to be sure our plan operates as designed and to manage costs.
Employment will not be terminated or otherwise effected if an employee discloses ineligible dependent/spouses before June 1, 2016.
MRA 2016 HR Conference
Communication Phase First Letter – The Announcement
On your company letterhead Consistent company message Start date / Completion date Introduction of outside vendor (if any)
“Communication is the number one deciding factor between a successful audit and one that goes very poorly.”
MRA 2016 HR Conference
2016 MRA HR Conference - Session 2A
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Communication Phase Second Letter ‐ Formal Instructions Consistent message Document Requirements Form Q & A document Due date Ensure privacy Contact information
MRA 2016 HR Conference
Communication Phase Q & A document (typically about 20 questions)
MRA 2016 HR Conference
2016 MRA HR Conference - Session 2A
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Communication Phase Third Letter ‐ Reminder Stress RISK of cancellation
Final Letter email List cancellation DATE
MRA 2016 HR Conference
Audit Process
Collect documents Verify authenticity Update Master Tracking Record Respond to calls Ensure privacy/security
MRA 2016 HR Conference
2016 MRA HR Conference - Session 2A
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Results/Consequences Termination of Coverage Appeals Period
MRA 2016 HR Conference
Results/Consequences COBRA? Seek approval of carrier/Stop Loss
No retroactive removal Rescission unlikely
MRA 2016 HR Conference
2016 MRA HR Conference - Session 2A
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Audit Summary EXAMPLE
Executive Summary Process Used Outcomes Follow Up Items
Focus on ROI
Outcomes • •
3 spouses were removed from the plan 3 dependents were removed from the plan
Follow up Items: •
•
Several employees had difficulty in obtaining documentation for a variety of reasons. These individuals supplied their most current Form 1040 and are allowed until DATE to return missing documents
ROI •
•
A total of 6 people have been removed from the plan at an average of $2,500 per person per year $15,000 savings per year!!
MRA 2016 HR Conference
Future Processes Require documentation for all new benefit enrollments Clarify enrollment definitions Full audit every 2 to 3 years
MRA 2016 HR Conference
2016 MRA HR Conference - Session 2A
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Benefit Eligibility Audits Should these audits be conducted internally or using an outside party?
MRA 2016 HR Conference
Advantage of Outside Auditor Neutrality Ensures HR is not placed in an uncomfortable situation Reduces the risk of personality conflicts Reduces employees feeling they are being singled out or scrutinized Auditors are seen as independent Adds layers between HR staff and audit process
MRA 2016 HR Conference
2016 MRA HR Conference - Session 2A
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Advantage of Outside Auditor Efficiency Prepared for extensive document collection 2 documents per dependent
Employs industry best practices Can effectively handle incoming questions and follow‐up communication Ensures privacy
MRA 2016 HR Conference
Advantage of Outside Auditor Third Party Auditor Engagement Letter
Identify the scope of services Staffing Information to be provided Fees and Expenses Executive Summary & Recommendations
MRA 2016 HR Conference
2016 MRA HR Conference - Session 2A
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Wrap Up Dependent Eligibility Audits are worth it! Audit Objectives Right people on your plan Best coverage at the most reasonable cost ERISA compliance
Audit ROI Average savings $3,000/year per dependent 3 to 12% of dependents are ineligible