Saturday, January 05, 2008

Audited lately?

No, I don't mean by the Infernal Revenue Service, but by your boss.
A brief primer: when putting together a group plan, carriers require a rather strict accounting of eligible employees. They want to make sure that everyone who's on the plan is eligible, and that all those who are eligible are on the plan or have appropriate waivers.
But there's another kind of accounting that comes into play, as well:
Many employer groups don't subsidize dependents' coverage; in fact, a lot of groups are dropping dependent coverage altogether. Not only that, but there's a significant movement towards requiring working spouses to opt for coverage under their employer's plan instead of electing dependent coverage.
Those that have retained that option are becoming more proactive in making sure that dependents are truly eligible for coverage. That is, requiring an employee to prove that they're really married, or have children, or both. Absent such proof, "the dependent loses coverage."
According to those "in the know," as many as 12 percent of covered dependents aren't really eligible for coverage. That's a lot of people who may not be as financially secure as they think.
In a way, this is a good thing: my experience has been that dependent coverage on group plans is much more expensive than comparable cover in the individual market (assuming reasonably good health). And by opting off the group, those dependents have a lot more choices in plan design. And it also makes that coverage portable: no need to elect COBRA, since you already own the plan.
Something to think about as we begin the new year.
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