Employee insurance audits can save money
The national health care reform act means a lot of older children will suddenly gain health insurance eligibility under their parents’ employment benefits come Sept. 23, which might seem to have a negative impact on a major segment of Bradley Taylor’s business — weeding out ineligible dependents hidden on the rolls.
He’s not so sure of that.
“I think it’s going to change it,” he said, but “we still have a large pipeline. The service still makes a lot of sense.”
Taylor, founder of Ada-based Next Generation Enrollment, said the Patient Protection and Affordable Care Act of 2010 may reduce the overall percentage of ineligible dependents that Next Generation sleuths find, but now there will be many more names to check in that larger “pipeline.”
Since NGE started offering dependent eligibility audits of employers’ benefit plans in 2007, it has found that, on average, about 6 percent of those dependents were enjoying benefit coverage to which they were not actually entitled. Those individuals are promptly removed from coverage, saving NGE’s clients, on average, more than $2,000 per dependent removed.
Under the new health care act, dependents age 19 to 26 can be covered under a parent’s plan regardless of the child’s income level or tax dependency status — even if the adult child is married and living somewhere else.
Currently, dependents only are covered past ages 19 if they are full-time students.
Under the new act, passed through the efforts of the Obama administration, “the only factor that may exclude a dependent child (under age 26) from being covered under mom or dad’s insurance is if that child is eligible for another employer-sponsored health plan,” said Taylor.
The enrollment changes will take place in every benefit plan renewal after Sept. 23, and the NGE auditors will definitely be busy.
“How the heck does somebody know, when all these dependents rush on, if in fact they’re eligible?” said Taylor. For example, a working 25-year-old might be tempted to be put on mom or dad’s policy if it’s a better deal than what his or her employer offers.
Next Generation, founded in 2004, now operates in 17 states around the nation, providing employee benefits administration services for small- and mid-sized companies. The firm, which has about 30 employees, has been growing steadily and added nearly a dozen new jobs this year alone. NGE has two call centers, one locally and one in the Washington, D.C., area.
A key to the success of NGE is its custom-developed software — branded NGen — a web-based flexible software package that allows NGE to adjust it to the specific needs of each client company. NGE developed it and keeps it updated with help from an Ann Arbor software development company.
“The system allows the client to manage their benefits plans in one place,” said Taylor. Rather than having to notify the carriers of the different types of insurance coverage the employee may have, every time there is a change, that data is entered into the NGE system “and we facilitate getting the data to the insurance provider.”
NGE call centers also provide answers directly to the employees of its client companies, making the employees part of the benefits management process.
The NGE client companies range in size from 50 employees up to 4,300. For companies that have had to downsize an HR department or have a small staff to begin with, the service can be a big-time saver, said Taylor.
The insurance coverage audits generate about half of NGE revenue, according to Taylor. He declined to reveal the privately held company’s annual revenue.
“We’ve got a good handle” on the audit process, he said. “Typically, we’re handling upwards of 15 to 25 different audits all at the same time.”
Audits are a great service for the public sector because of “the richness of benefit plans” and the low employee contribution levels, according to Taylor. When a public employee isn’t paying for dependent coverage directly out of his or her paycheck, the parent may not even think about it when a dependent becomes ineligible, “and the person just stays on the plan,” incurring claims or at least requiring the employer to pay premiums for that ineligible person.
“We’ve audited over 50 school districts in Michigan,” said Taylor, adding that some of those savings have been in excess of $250,000 annually.