Employers Use Eligibility Audits to Control Health Care Costs

February 19, 2009 (PLANSPONSOR.com) - With cost-savings in mind, some employers are conducting dependent eligibility audits to accurately determine who is covered under their plan.

A recent survey conducted by the International Foundation of Employee Benefit Plans (IFEBP) found that 26% of U.S. employers conduct eligibility audits for their health care plans.

class=”msonospacing”> “Employers conduct an eligibility audit to ensure that every person covered by their health plan is an approved dependent,” said Julie Stich, Senior Information/Research Specialist with the IFEBP, in a press release. “When the audit is conducted, employers often discover many people-former spouses, adult children, non-immediate family members-who are covered under the health plan even though they do not qualify as a dependent.”

Stich points out that removing ineligible dependents from a plan can save employers hundreds of thousands of dollars, and says she expects the number of employers that conduct eligibility audits to grow.

Some say an audit could save employers 2% to 5% of their overall health care expenditures (see Total Benefits: Paring the Rolls ).

Other cost-saving techniques reported in the IFEBP’s Employee Benefits Survey: U.S. and Canada, 2009, include:

  • Cost-sharing provisions for deductibles, coinsurance and copays (74%), annual and/or lifetime maximum benefits limits (56%), and prior authorization (55%);
  • health care claims/utilization analysis (39%), health care claims audits (26%), and opt-out incentives (15%); and
  • Predictive modeling, a strategy that uses claims data and lifestyle analytics to identify potential catastrophic claims and disease states, (12%).

The IFEBP found another health care benefits cost-saving option considered by employers is voluntary benefits, which are group benefits offered at the workplace but paid for by employees. Voluntary benefits may include coverage supplemental to the employer's current offerings or, for those employers who are unable to provide health care coverage, they may include standard health insurance. The survey found that 39% of employers have voluntary health insurance, 40% offer voluntary dental insurance, and 37% have voluntary vision insurance.

Employers are also implementing a number of cost-management techniques for prescription drugs, according to the IFEBP press release.

The most popular technique among the respondents was using a mail-order drug service (85%), followed by promoting generic drugs (71%), the use of drug formularies (68%), three or more tiers for cost sharing (59%), and the use of a pharmacy benefit manager (50%).

Employee Benefits Survey: U.S. and Canada, 2009 (Item #6542) is published by the International Foundation of Employee Benefit Plans, and costs $132 (I.F. Members $99). To order visit www.ifebp.org/books.asp?6542 , e-mail bookstore@ifebp.org or call (888) 334-3327, option 4.