The Ineligible Dependent Problem
Studies consistently show that 3–8% of enrolled dependents are ineligible for coverage. Common ineligible dependents include ex-spouses who were not removed after divorce, adult children over age 26, children of divorced employees who are covered by the other parent's plan, and domestic partners who no longer meet the plan's eligibility criteria.
The Audit Process
- 1Notify employees of the audit and the documentation requirements
- 2Request documentation for each enrolled dependent (marriage certificate, birth certificate, etc.)
- 3Review documentation and identify ineligible dependents
- 4Notify employees of ineligible dependents and the termination date
- 5Offer COBRA to ineligible dependents who lose coverage
- 6Calculate the cost savings from removing ineligible dependents
Audit ROI
IQ Insight
Dependent eligibility audits typically cost $15–$30 per enrolled dependent and save 2–5% of total plan cost. For a plan with 500 enrolled dependents and $2 million in annual claims, an audit that removes 5% of ineligible dependents saves $100,000 — far more than the cost of the audit. Most employers who conduct an audit see a positive ROI within the first year.