Health-care audits curing some bills Firms requiring proof dependents eligi...

[Omaha Steve]

http://www.chicagotribune.com/business/yourmoney/chi-06...

YOUR MONEY: A WEEKLY GUIDE TO PERSONAL FINANCE

Health-care audits curing some bills
Firms requiring proof dependents eligible

By Eileen Ambrose, a columnist for The Baltimore Sun, a Tribune Co. newspaper

October 22, 2006

Sign up family members for your employer's health insurance during open enrollment, and you might hear this from the company: "Prove it."

You might be asked to produce birth certificates, adoption papers or college transcripts to show that a child is eligible for your health plan. Or you might have to dig up a marriage license to confirm a spouse.

These "dependent audits" have been around for a long time, but started taking off recently as employers have wrestled to keep health-care costs down. Audits generally find that 2 percent to 15 percent of dependents are not eligible, said Sara Taylor, a benefits expert with Hewitt Associates.

Sifting out freeloaders can create substantial cost savings for employers, considering that employers' costs rise as much as 12 percent a year, said Randall Abbott, senior consultant with Watson Wyatt Worldwide, a consulting firm.

Ford Motor Co., for instance, pared more than 60,000 ineligible dependents from its insurance rolls since starting audits in 2000. Spokeswoman Marcey Evans won't say how much the audits saved, but it's likely well into the hundreds of millions.

The automaker last year spent $3.5 billion on health benefits, and now covers 550,000 workers, retirees and family members. That would put the cost of health care at about $6,360 per person.

Chrysler Group followed Ford's model, and in the first three years dropped 26,000 individuals who were not entitled to insurance. The automaker this year will spend $2.3 billion on health care for about 360,000 people.

Audits basically work like this: The employer sends a letter describing dependents eligible for coverage, usually a spouse or children until they graduate from college.

FULL story at link.