The Truth about Dependent Verification: Why You Need a Third-Party Partner

Is your organization wasting money insuring ineligible people? Learn how to avert this costly, yet common HR mistake via dependent verification. Hodges-Mace expert, Katy Dahlstrom explains all of this, plus why HR should NEVER attempt this alone.

Employee perception is one of the biggest challenges companies face today.  How valued is an employee to the company for which they work?  What is their total compensation and how does that rival the competition?  What is your employer’s true investment in you?  In an era where healthcare is in the news daily and premiums seem to be rising annually, every employer needs tools to ensure they remain compliant and competitive. 

The best way to ensure these needs are met is to process a verification of every dependent covered on the health plans.  At first glance, many employers shy away from a dependent verification process for fear of workload increases, employee scrutiny, and a never-ending project.  In reality, a dependent verificationOpens a new window is a phenomenal opportunity for the employer to change the narrative and truly convey how much they care about not only keeping the cost down but ensuring their valuable employees aren’t stuck with a big claim due to lack of education around their benefits. 

Often, employees don’t realize that they are carrying an ineligible dependent on their coverage.  Many of the benefit documents they receive are written in legal terms and quite lengthy.  Additionally, the following may arise:

1. A court orders the employee to provide coverage for a former spouse.  This does not necessarily mean that the former spouse is eligible for the company’s coverage unless “former spouse” is an eligible dependent type.
2. An employee participates in a family tier of coverage and has a child who recently turned 26.  The employee may assume that HR will remove the overage dependent without being prompted, or not even consider removing them because there may not be a change to their paycheck.
3. An employee files their taxes and claims their niece as a dependent.  They believe that because they file this with the federal government that they can add the child to their company coverage without legally adopting or gaining legal guardianship of the child.

These are real-life examples of day to day, honest mistakes, that come to light during a dependent verification. Opens a new window  That said, there are follow up questions around what happens when a dependent is found ineligible?  Should they be removed retroactively?  Should additional action be taken?  What is the best way to ensure a verification is not perceived as a “witch hunt?”  Where does that dependent begin to find coverage for which they are eligible?

These questions will be asked so it’s important to know how to allay these worries from the beginning. Partnering with a third-party solution is key to shifting this talk track. A third-party solution can take the time to not only explain the documents needed but also provide the why around the project itself. Coming from a third-party, the employee is more likely to believe the representative who states that the verification is to provide protection for the employees and their loved ones. It’s an opportunity to make sure everyone is compliant. For the HR team, a third-party can take those tough questions, adjudicate the incoming documents and ensure that this is not a never-ending project. HR should not be responsible for determining the validity of their peers’ personal documents. 

When finding the right third-party partner to process this verification, here are some key factors to consider:

• The cost of the project should be clear. This should include an ROI estimate, if not a guarantee. 
• The timeline should be concise and fit the employer’s internal projects. Typically, a verification timeline should fall between 6 – 10 weeks to give time for reminders, ordered documents to arrive, etc.   
• The representatives caring for the employees should be knowledgeable about where to order documents, what kinds of documents can be interchangeable, translation needs and compassion for the worry employees may express. These representatives should be able to clearly articulate the value of this project and have the employee understand the necessity.
• Customized and flexible communications are vital for the success of a verification. Employees need to be reminded about the end date, they also need to have confirmation of completion or outstanding actions. They should receive these notifications in the best manner for them. U.S. Mail, e-mail, etc.

These are just some of the key factors to consider when choosing a third-party partner. Company-specific items are also to be measured. What is this company’s success rate?  How will they update you along the way of the trends they are seeing? Will you have a dedicated Client Manager as your point of contact?  How involved do you need to be after you hand over the list of people to be verified? 

The ultimate goal is to engage the employees in education around benefit compliance. This investment will enrich the employer/employee relationship and provide a level of understanding that while cost is a factor in the verification, the most important piece is always the employee’s financial risk.    

I recently presented a webinar Opens a new window with my colleague, Anna Simmons, on Busting the Myths of Dependent Verification