NCPA - National Center for Policy Analysis


September 11, 2008

Soon, many people might find themselves without insurance following an increase in companies that are checking for ineligible dependents, says Forbes Magazine.

Checking health plan eligibility is a good way to pinch pennies, and since the stakes are large, many employers are doing their best to root out ineligible dependents.  Often employers find themselves footing health care costs for employees' ex-spouses and adult children who are not in school.  If they want to continue operating in the black, they can not keep this trend up, say Forbes.

Below are a few companies that are weeding out dependents:

  • By the end of this year, 12,000 people could be dropped from General Motors' health plan; the automaker just finished auditing 80,000 salaried employees and the 125,000 family members listed as their dependents and found that 10 percent of the dependents could be claiming benefits to which they are not entitled.
  • When the dust clears, GM's savings from bouncing ineligible health claimants could be up to $100 million a year.
  • AT&T will save $40 million this year by cutting loose 10,000 people who don't qualify for the coverage they have been receiving.
  • Chrysler has clawed back an estimated $50 million in paid benefits from employees who defrauded its health care plan.
  • American Airlines finished an audit in 2006 that resulted in almost 10,000 ineligible people losing their coverage.

But rooting out ineligible dependents is nasty work, says Forbes.  Employees must share tax forms, birth certificates and marriage licenses to make auditors happy.  As many as 15 percent of dependents can be bounced because the employee is divorced, or because minors, including stepchildren, nephews and nieces, are 18 or older and are not full-time students.  A third of those employees are committing fraud.

Source: David Whelan, "Your Marriage License, Please," Forbes, September 15, 2008.

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