We've asked Mark Misiek, Business Development Consultant for Hewitt's Dependent Audit and Health Plan Eligibility Services, to answer several questions about dependent audit. If you'd like to ask a question about this topic, or about any other pressing human resources challenge you might be facing, e-mail us. We'll share responses to select questions on a regular basis.

Question: What is a dependent audit?

Answer: Dependent audits are one-time or ongoing events that allow employers to validate the eligibility of dependents covered under their health and welfare insurance plans. In other words, an audit assures employers that only eligible dependents are covered under their benefit plans, and that company-provided benefit dollars are allocated to entitled individuals.

Question: What are the key drivers that can help determine if I have an issue with employees covering ineligible dependents?

Answer: Here are a few questions you can ask to determine if ineligible dependents are incorrectly covered under your benefits:

• How rigid is our dependent enrollment process? The more demanding the enrollment process (i.e. supporting documentation required to enroll), the less likely ineligible dependents will be covered under the plan.
• When was the last time (if ever) we conducted a dependent verification? More recent/frequent audit activity lowers the potential for ineligible dependent coverage.
• How easy are our dependent eligibility requirements for employees to understand, and how frequently are these requirements communicated? Complex requirements + infrequent communication = increased potential for ineligible dependents covered in error.

Question: On average, how many ineligible dependents does an audit reveal?

Answer: Typically, an audit reveals that 4 % - 8% of a dependent population is ineligible, with extreme cases ranging from 2% - 20%.

Question: We ask our employees to confirm their dependent eligibility each year during annual enrollment. How is a dependent audit different?

Answer: While dependent verification usually requires employees to validate eligibility either online or verbally, a dependent audit is more thorough. In order for dependent coverage to continue, dependent audits require employees to provide paper documentation that confirms both the dependent's relationship with the employee and financial responsibility.

Question: What type of audit strategy do you recommend for a company with little experience in dependent audits?

Answer: A random, sample audit is a good way to get the "pulse" on the accuracy of dependent coverage. With the potential for significant cost savings, many companies choose to conduct an audit of the entire dependent population. This is where learning about the company's history, culture and objectives for the audit come into play. After we gain a thorough understanding of the company, we would recommend an audit solution to best meet its objectives, while balancing the complexity and sensitivity of conducting a dependent audit.

About Our Expert
Mark Misiek is a business development consultant for Hewitt's HRO Point Solutions practice, where he is a subject matter expert for Dependent Audit Services and Health Plan Eligibility Services. Since joining Hewitt in 1997, Mark has held both associate and managerial positions and has created, implemented, and delivered tailored solutions for key client service projects. Mark received a B.A. in Communication from Northeastern Illinois University, Chicago.