Dependent verification audits are conducted to confirm that dependents enrolled in an organization's benefits plans are eligible for coverage. While there is no legislation that outwardly mandates dependent verification audits, under the Employee Retirement Income Security Act (ERISA) employers are responsible for only paying benefits to eligible participants.
In many cases employees may not realize that they have enrolled an ineligible dependent. This can happen when an employee enrolls a boyfriend or girlfriend as a spouse, a grandparent enrolls their grandchild as a child or an employee’s divorced spouse remains on a plan.
Ineligible dependents are costly to an employer and its employees, potentially causing increased premiums or leaving the employer liable for penalties for violating its Summary Plan Description (SPD).
Employers can audit all dependents enrolled in a plan or choose to verify dependents when they are first added to the plan. Employees should be notified of an audit prior to it being conducted and should be asked to provide any required documents that support their dependent’s eligibility. While a company can use its own HR team to administer an audit, an external audit can save time and resources. For more information on how to conduct a dependent audit contact your Bukaty benefits team.