This post was written by Robert at The College Investor, a personal finance site for college students and young adults.
I can’t stand people who game the system at other’s expense…and insurance seems to perpetually fall into this category. This year, my employer announced a new program to combat insurance costs (i.e. fraud): dependent verification.
The premise is this: it is estimated that 30% of people on my company’s insurance plan are not actually be eligible for the plan. They claim that there are a lot of ex-spouses, children who are now too old, and many other games being played on our company’s insurance plan. Considering we are a very large company (over 100,000 employees), this could realize some significant savings.
Verifying Dependent Eligibility
So, what do I have to do? I have to actually submit proof that I’m married or else my wife’s coverage under my plan is dropped and I will have to reimburse the company for any expenses incurred on her behalf during any period in which she was ineligible. Sounds pretty harsh right? Well, they are giving an amnesty period for 90 days to drop any ineligible dependents from the plan without paying any penalty costs.
For me, this only means submitting a copy of my marriage certificate to my company’s HR department. For others, it could mean giving a lot of personal information over to the HR department.
How Far is Too Far to Combat Fraud?
So, my question is this: do you think dependent verification is fair? How much personal information should you be required to turn over to your employer? What about the penalties – can an employer really make you pay back ineligible insurance expenses?
I hate the fact that I have to pay higher insurance premiums because of fraud, but I also hate my employer knowing too much about my personal life. What are your thoughts?
How do they know whether policyholders didn’t get divorced (in a different state). Are they getting regularly updated databases from every state?
@Terry Pratt, that’s a tough call, but it doesn’t really matter. They drop you from your insurance if you don’t provide a marriage license. I guess you wouldn’t have to provide a divorce decree, but I’m sure the company they outsource too collects data from everywhere.
I have been directly involved in several dependent audits as a provider. The most common thing we see is the employer combining a carrot with the request for personal documentation.
The carrot is often a bonus offered to employees to drop coverage – provided they can show evidence of creditable coverage. For example, many government employees pay little or nothing towards coverage, so they often have two insurance plans if both spouses work for a government entity.
The divorce question is tricky – as this is often a prime source of employee abuse. The data is publicly recorded by county. Credit bureaus collect and consolidate some public record data but not divorce filings.