Yes, an employer is perfectly within its rights to perform a dependent eligibility audit. Some plans unknowingly continue to cover individuals whose status as a spouse or dependent has changed (due to a divorce or a dependent’s age, for example). Conducting a dependent eligibility audit is an effective way to discover if this is happening in your plan.
A dependent eligibility audit is typically conducted in two phases:
- Phase I is typically called an "amnesty program." Employees are surveyed to confirm the eligibility for all enrolled dependents and are typically given the opportunity to voluntarily remove all ineligible dependents from the benefit plan without recourse or retribution.
- Phase II is typically referred to as a "dependent document review," where the employer requires proof to be submitted by employees with dependent coverage.
The results of such an audit may reveal numerous dependents who are no longer eligible for coverage, and removing them from your plan may save your organization a significant amount of money.