In This Issue:

• Expanded dependent eligibility opens the door to errors and fraud. Here’s what you can do.
• HDM Introduces blog to stimulate thinking about health plan cost containment.
• HDM to show SALGBA members “How to avoid a head-on collision with the Cadillac tax.”

 

Expanded dependent eligibility opens the door to errors and fraud. Here’s what you can do

Healthcare reform opens the door to millions of new members for public sector, corporate and Taft-Hartley health plans across America due to a provision in The Patient Protection and Affordable Care Act (PPACA) that increases the age of eligible dependent children to 26.

Consider the demographics of your plan. If large blocks of your members are in their late 40s and 50s, your budget could be hit from the 1,250,000 million young adults that the U. S. Department of Labor expects will take advantage of the increase in the eligibility age in 2011 alone.

Health benefit plans in effect as of March 23, 2010 are grandfathered from the impact of some of the provisions of health care reform, but not the big ones. Two of these are the provision increasing the dependent eligibility age, and the provision that generally prohibits rescission of coverage.

All plans will have to extend plan coverage to enrollees’ children up to 26 years of age. The advantage to grandfathered plans is that they do not have to extend coverage to children up to 26 who are currently covered by other plans. For non-grandfathered plans, all “children” up to age 26 – even if they are already covered by another plan – have to be extended coverage.

A companion provision of PPACA prohibits both self-funded and fully insured plans from rescinding coverage to an enrollee for any reason other than fraud or the enrollee’s intentional misrepresentation of material fact. HDM can help you take precautionary measures to limit the adverse impact of these provisions on dependent eligibility audits.

These changes take effect for health plan years beginning on or after September 23, 2010.

As is the case with numerous elements of healthcare reform, the wise will take action to mitigate the impact of the added expense, said David McSweeney, COO of Healthcare Data Management, Inc. (HDM).

“With Dependent Eligibility Audits, it is not uncommon to find ineligible dependents in the double digits. There’s no reason to believe that the increase in the dependent eligibility age will cause the percentage of ineligible dependents to go down,” McSweeney explained.

The way to protect your plan and your members is to do a Dependent Eligibility Audit (DEA) as soon as possible. Get a good baseline audit now, then selectively scrutinize eligibility in the fall or winter of 2011 of young adults who have been accepted or re-accepted to the plan. Then, depending on your demographics, repeat the selective DEA every year or two years,” McSweeney added.

Chances are that, if you’ve never done a DEA, the baseline audit will pay for itself, and, if HDM’s experience is a hint of things to come, so will the selective DEAs that follow.

For more information, contact James Herrington, HDM’s Chief Marketing Officer: 610-491-9800 (Ext. 280)jherrington@hdminc.com.