dependent eligibility audit cost savings
Dependent Eligibility Audits Reduce Health Costs for All Industries
Dallas, TX, May 19, 2009 -- Because corporate officers have a fiduciary responsibility to reduce health benefits costs, HRAdvance is publishing client results by industry of health plan dependent eligibility audit cost savings. Based on actual client results, first year return-on-investment (ROI) varied by industry with one hospital saving ($6M in first year cost savings) to more typical cost savings for manufacturing ($1.1M), technology ($1.2M), transportation ($1.3M), and government ($1.4M) (full report of dependent eligibility audit cost savings results by industry). The percentage of ineligibles per employer ranged from 7% to 19% with our book of business averaging 12%. The results highlight that the majority of ineligibles are children under the age of nineteen and ex-spouses.
"Historically, only the largest employers have conducted dependent eligibility audits of their benefit plans," said Craig Firestone, CEO of HRAdvance. "Recent economic challenges remind all of us that the fiduciary responsibility to reduce costs runs across the senior management team, given that health plan expense is often their fastest growing cost component."
In 2008, health care costs for U.S. employers rose by 6%, faster than inflation or wage increases. In dollar terms, this means that gross health care expenditure increased by an average of $526 per employee, to an average total cost of $9,144, according to Towers Perrin 2008 Health Care Cost Savings Report. Notably, research suggests that the average cost increase would have been closer to 8% or about $200 per employee more, if not for employer efforts to aggressively manage benefit programs.
As opposed to initiatives that transfer costs to employees or programs that take years to realize results, a dependent eligibility audit provides immediate savings by removing ineligible dependents from a company''s health plans. In Q4 of 2008, an HRAdvance client in the retail sector with more than 53,000 workers covered under their health plan(s), produced first-year savings of $25 million, net of the audit''s cost.
Employers can evaluate the potential economic impact of an audit by calculating their savings with the Dependent Eligibility Audit ROI Calculator. HRAdvance makes this resource available to help employers compute potential health plan savings. The calculator utilizes factors derived from the Bureau of Labor Statistics, consulting firm publications, as well as HRAdvance empirical outcomes to ensure objectivity.
As health plan benefits costs continue to increase, business leaders should use the ROI calculator to forecast the impact an audit can have on future benefits cost trends. "Employers are adopting dependent eligibility audits at an unprecedented pace to prevent unnecessary claim expenditures, avert reductions in workforce and show stakeholders proactive cost saving efforts," says Brennan Clipp, SR VP of Sales and Marketing at HRAdvance. "A number of major enterprises, CVS, McGraw-Hill, Carolinas Healthcare, TXI, Alltel and McLane Companies have already completed their audits and realized millions in cost savings."