Auditing Health Plan Dependent Eligibility? Be Careful

Employers that allow dependents to be covered under their health plans need to be aware of health care reform rules that may limit their ability to retroactively remove ineligible dependents from coverage.

Background

To ensure that only dependents who meet a health plan's eligibility requirements are enrolled, many employers audit dependent eligibility and require documentation to verify eligibility. In general, if an employee cannot provide verification of a dependent's eligibility, the dependent is removed from coverage either retroactively to the date of enrollment or prospectively as of a date specified by the employer. The health care reform law placed limits on retroactive cancellation of coverage, and employers will need to understand the new rules in order to avoid triggering possible penalties. Group health plans (including both grandfathered and non-grandfathered plans) and insurers that issue group or individual health insurance coverage are all subject