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September 10, 2007

Employers Scrutinize Health Insurance Eligibility

If you're one of the millions of Americans who receives your health insurance through your employer, you would be wise to read the small print before signing up family members for coverage this enrollment season.

And if you've signed up your girlfriend as your "spouse," now's the time to cut her coverage.

Faced with rising medical costs, U.S. employers are starting to scrutinize the eligibility of dependents, such as spouses and children, who are covered under their health plans. Traditionally, employers relied on an honor system to manage enrollment. But now, in an effort to restrain rising health spending, a growing number of employers are requiring employees to provide documented proof.

Workers should be prepared to dig out copies of birth and marriage certificates, root around for tax returns and obtain a letter from their child's college. Employees who fail to provide supporting documents when asked risk losing health coverage for their loved ones and, in rare cases, their jobs -- if they knowingly seek coverage for family members they know to be ineligible. In cases of clear fraud, an employer may also seek to recoup plan-paid medical and prescription costs.

Large auto makers such as General Motors Corp., Ford Motor Co. and Chrysler LLC have dropped tens of thousands of ineligible dependents from their health plans by using audits. Now banks, hospitals and hotel chains -- where staff turnover can be high and benefits a major attraction of the job -- are following suit.

"It's an issue that's top of mind for employers," says Susan Johnson, a senior consultant at Watson Wyatt Worldwide in Chicago who oversees audits carried out by the consulting firm.

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Posted by healthinsurance at September 10, 2007 10:56 PM