Dependent Eligibility Audit: Overview
The deadline to submit documentation verifying the eligibility of your dependent(s) for the 2008-2009 plan year has been extended to July 11, in order to ensure that no eligible dependents lose benefits coverage!
For a list of documents that can verify the eligibility of your dependents, click here. For a list of the criteria that determine an eligible dependent, please consult the relevant section of the Health and Welfare Summary Plan Description [pdf].
As part of an important initiative to ensure legal compliance and good governance—and to aid in our continuing goal to control healthcare costs—Penn is currently conducting a dependent eligibility audit for our health plans.
What does this mean for you? If you are an active faculty or staff member and you have elected to cover dependents under Penn’s health plans for the new plan year (July 1, 2008 - June 30, 2009), you’ll need to provide documentation verifying their eligibility for coverage under Penn’s plan rules. It’s important to understand that if you can’t produce that documentation when Penn requests it, any unverified dependents will be dropped from your coverage, and there may be additional consequences. Please keep reading for answers to the following questions:
A dependent eligibility audit is intended to ensure the accuracy of our records by verifying the eligibility of dependents currently receiving benefits through Penn’s health plans. While it’s important that all faculty and staff have the opportunity to enroll eligible dependents in the University’s plans, covering ineligible dependents is a violation of the plan rules—and it drives up the cost of benefits for all of us.
Dependent eligibility audits are a growing trend nationwide. Verifying the eligibility of the dependents covered under our plans is critical to the process of protecting the University from fraud and ensuring that we’re not violating our fiduciary, legal, and fiscal duties. We certainly aren’t trying to make it difficult for you and your family to access coverage—however, we need to make sure procedures are in place so that the appropriate people have access to the coverage they need.
Last year, an audit of the University’s consolidated financial statements was conducted by our external auditors, PricewaterhouseCoopers, who recommended that we formalize and strengthen the University’s controls related to payroll and benefits. Penn has a fiduciary responsibility to ensure that our sponsored plans operate according to their established enrollment and eligibility provisions—a responsibility which is in line with Penn’s Principles of Responsible Conduct. In addition, federal regulations such as ERISA and Sarbanes-Oxley require employers to ensure that ineligible dependents are not receiving coverage.
A dependent eligibility audit can also help the University in our continuing quest to control healthcare costs. As we’ve communicated for several years running, the cost of healthcare across the nation has been on a steady and sustained upswing. Studies indicate that ineligible dependents account for 3% of benefits costs, on average. Considering the amount that a large institution such as the University spends on health benefits, 3% can mean a great deal.
ADP, the University’s benefits administrator, has mailed personalized letters out to all active faculty and staff who elected to cover dependents under Penn’s benefit plans for the 2008-2009 plan year. This letter asks recipients to provide documentation verifying that their dependents are eligible to be covered under Penn’s plans. Faculty and staff who receive this personalized letter will need to send the letter, along with the appropriate documentation, back to ADP by the extended July 11 deadline in order to ensure coverage for their dependents in the new plan year. Examples of documentation include birth certificates, marriage certificates, and certifications of domestic partnership. A full list of acceptable documents is available here.
Please note that the dependent eligibility audit will only affect active faculty and staff.
There are a variety of reasons why claimed dependents may be (or may have become) ineligible to receive benefits through Penn—children may have reached the age limit, your marital or domestic partnership status may have changed, or an individual may not meet the IRS guidelines for a legal dependent, just to name a few. It’s important that you understand Penn’s requirements so you can be sure your dependents are eligible for coverage. Eligible dependents include but are not limited to your spouse or same-sex domestic partner, children up to age 19 (or up to age 23 if full-time college students), and disabled children age 19 or older. For further clarification, you should thoroughly review the relevant section of the Health and Welfare Summary Plan Description [pdf].
During the 2008-2009 plan year, those who are covering ineligible dependents will face financial and other consequences. Ineligible dependents will be removed from coverage, and faculty and staff may face repayment of premiums and healthcare claims as well as applicable University sanctions. So please be sure to review your dependent information carefully and send in the appropriate documentation.
If you elected to cover dependents under your benefit plans during the 2008 Open Enrollment Period, make sure that you have legal documentation to verify the eligibility of those dependents for the 2008-2009 plan year. Do you know where your marriage certificate is? Your children’s birth certificates or adoption papers? It’s very important that you have the proper documentation at hand and that you submit it to the Penn Benefits Center no later than the extended July 11 deadline.
Personalized letters with instructions about how to respond and what information is needed were mailed out in May. If you haven’t submitted your documentation yet, you’ll receive a reminder letter in June repeating those detailed instructions.
If you have questions about the upcoming dependent eligibility audit, you can call the Penn Benefits Center at 1-888-PENN-BEN (1-888-736-6236).