How Health Care Reform Will Affect Dependent Eligibility Audits: Answers from HRAdvance

Dallas, TX April 7, 2010 -The recently passed Patient Protection and Affordability Act will have a significant impact on employers and the health insurance choices they offer their employees.

One significant area of this new legislation is Section 2714, which mandates that coverage must now be provided to dependent children up to 26 years of age. Additionally, recently passed affordability changes to this section make Section 2714 applicable regardless of marital status, while excluding those who have access to another employer sponsored health plan. Critical questions remain unanswered as the industry waits for the Secretary of Health and Human Services, Kathleen Sebelius, to define who is covered under the term “child”, as used in the new regulations. This clarification will be key to understanding the impact of the new law on dependent eligibility audits.

Impact on Dependent Eligibility Audits

On average HRAdvance clients find 11% of dependents to be ineligible. Children over the age of 19 make up approximately one-third of the total ineligible dependents in our current dependent eligibility audits, or 3.3% of the total 11% ineligible.

Historically, HRAdvance required proof of relationship, financial responsibility and enrollment status to prove eligibility. Under the new system, employees will no longer have to prove financial responsibility or student status for child dependents. We estimate the number of ineligible overage dependents will be reduced from 3.3% of the total population to an average of 1.5%, based on enrollment status now being irrelevant.

We know from our current results that clients who do not require financial dependency for underage children will have a slight drop compared to clients who do require it. We estimate that eliminating financial relationship as a condition for eligibility will reduce the results by another 2-3%.

The bottom line? Our estimate is that the impact of health care reform as it relates to audit results will be that the number of ineligible dependents will drop by about 4-5% compared to current levels. However, the impact on our client’s return on investment will be far less significant. Why?

Children under 26 consistently incur fewer and less costly claims. As a result, HRAdvance projects that the return on investment from a dependent eligibility audit will be reduced, but to a lesser degree than the ineligible percentages, as a direct result of the Patient Protection and Affordability Act.

“The figures show a comprehensive, thorough dependent eligibility audit will remain one of the best tools available to HR professionals for both controlling costs and delivering quality benefits to employees,” said HRAdvance founder and President Craig Firestone. “We look forward to working with our clients in every industry to deploy solutions that address this legislation.”

Next up will be HRAdvance’s assessment of Section 2712 which intends to prevent removal of ineligible dependents from employer sponsored health plans.

About HRAdvance:

HR Advance was founded in 2004 with a single mission: to provide HR and benefits professionals with best-of-breed hosted solutions that can be deployed without capital expenditure or IT dependency. Its guiding principle is that employees are the most valuable assets of every organization.

The company’s core competencies are its Plan-Smart™ and Plan-Guard™ dependent eligibility audit solutions. Its management competencies and healthcare focus reflect more than 150 years of combined experience in developing automated human resource, benefits, administrative and financial services for government, public and private organizations. Visit to learn more.

This press release was distributed through PR Web by Human Resources Marketer (HR Marketer: on behalf of the company listed above.