Key Highlights
- Introduction: A Real-Life Scenario Facing Many Employers
- Why Eligibility Audits Matter for Cost Control and Compliance
- What Brokers and Employers Often Get Wrong About Eligibility Audits
- Why Brokers Choose Eligibility Audits to Deliver Real ROI
A Real-Life Scenario Facing Many Employers
Meet Sarah, a project coordinator juggling balancing work deadlines and a recent divorce. Like many people, updating her benefits wasn't top of mind, and her employer didn't catch the change either.
It wasn't until a routine dependent eligibility audit that the plan discovered her ex-spouse was still covered. Because the divorce occurred within the last 60 days, Sarah qualified for a mid-year change and was moved to a single policy. The update not only saved her money, it also prevented her employer from absorbing thousands in unnecessary health plan costs.
One person might not seem like much, but the impact is real: On average, covering a single ineligible dependent costs employers $3,850 per year. Without an audit, issues like Sarah's often remain undetected, quietly increasing plan spend and compliance risk.
While HR teams catch some updates during life events or open enrollment, eligibility audits are the only comprehensive way to verify every dependent and uncover the hidden costs that slip through routine processes.
Why Eligibility Audits Reduce Costs and Ensure Compliance
Dependent eligibility audits verify that every person listed on an employer’s health plan meets eligibility rules (e.g., legal spouse, children under age 26, etc.) and they uncover the gaps that day-to-day processes simply don't catch. Life events like divorce, marriage, job changes, and aging out often go unreported, leaving dependents on the plan long after they no longer qualify.
These oversights add up quickly. Industry studies show that 4-8% of dependents are ineligible, costing employers nearly $4,000 per dependent per year. For a 1,000-employee group, that can mean $154,000 to more than $300,000 in unnecessary annual plan spend.
Beyond cost control, audits help employers maintain compliance with ERISA and ensure their plan is being administered according to the rules outlined in their plan documents—a growing priority as benefits become more complex.
For brokers, dependent eligibility audits offer a tangible, measurable way to deliver immediate savings and strengthen the value they bring to clients each year.
What Brokers and Employers Often Get Wrong About Eligibility Audits
Despite the proven value of eligibility audits, several persistent myths often prevent employes and brokers from taking advantage of significant savings. Here are the misconceptions we hear most often—and the truth behind them.
Myth: We don’t have ineligible dependents.
Fact: Nearly every organization does—even if unintentionally.
It’s easy to overlook dependents who no longer quality for coverage. Employees forget to drop ex-spouses or continue to include adult children who’ve aged out of the plan. In fact, on average approximately 4-8% of dependents are ineligible for benefits.
Myth: Audits cost too much and don’t provide ROI.
Fact: Dependent audits save money—often thousands of dollars per dependent.
While health plan costs increase each year, dependent eligibility audits enable employers to manage health plan costs. A large HVAC/R supplies distributor uncovered significant savings of nearly $1 million dollars. Read how the employer realized a 1,036% ROI from the eligibility audit.
Myth: Employees will revolt if we audit dependents.
Fact: Employee pushback is minimal when audits are handled correctly.
Most employees understand that verifying dependents keeps costs down by ensuring only eligible family members are covered. With clear communication coordinated by an employer’s HR team and SISCO, employees are educated about the federal requirements, given ample time to respond, and provided multiple ways to submit documentation. As a result, employers find that audits build trust—not resentment.
Myth: Audits are too resource intensive.
Fact: SISCO does the heavy lifting, keeping HR workload to a minimum.
Most HR departments don’t have extra time to validate every birth or marriage certificate. SISCO’s customized approach and coordination around the employer’s schedule minimizes disruptions to HR’s primary work. For HR teams, investment is typically limited to upfront coordination and any follow-up on a small number of unresolved cases.
Why Brokers Choose Eligibility Audits to Deliver Real ROI
Brokers are under increasing pressure to help clients manage rising health plan costs, and dependent eligibility audits are one of the most straightforward ways to deliver measurable, defensible savings. With 4-8% of dependents typically ineligible, identifying and removing these individuals generates immediate cost reduction and decreases unnecessary claims exposure—results that resonate clearly during renewal conversations.
Eligibility audits also strengthen a broker's consultative approach. They demonstrate proactive oversight, ensure clients' plans are administered according to documented eligibility rules, and reinforce the broker's role as a strategic partner. Employers increasingly expect this level of accountability and transparency from their benefits advisors.
Partnering with SISCO makes the process completely turnkey. We manage all communications, outreach, documentation collection, verification, and reporting—keeping HR's workload minimal while giving brokers and plan administrators clear, actionable results.
Let’s Talk Strategy
If you're ready to help clients reduce unnecessary costs, improve compliance, and strengthen the long-term performance of their health plans, SISCO is here to support your strategy.
