Business Growth & Strategy

Health Care Reform may increase the Number of Ineligible Dependents: and why CEOs should care

While Health Care Reform is currently a much-discussed item in the media, the Wall Street Journal recently reported that the majority of CFOs are not considering the repercussions for their companies. The following study proves the fiscal responsibility for corporate leadership to research the effects of the Patient Protection and Affordable Care Act (PPACA) on their health care plans.

Ineligible Dependents:  Previously 5-12% of Dependents on Group Health Care Plans

Many experts believe that the number of ineligible dependents on a company’s health care plan will decrease as the mandates of the PPACA take effect. Nationwide, prior to PPACA, between 5-12% of group plan participants were typically found to be ineligible. The early results are in for a study showing that wider eligibility criteria may, in fact, directly correlate to higher percentages of ineligible dependents.

Reform guidelines now require that adult children up to the age of 26 be eligible for coverage on their parents’ group health care plans, regardless of marital or employment status.* Many employers assume that this will significantly increase their enrollment body, and recent news reports confirm.  The enrollment of this age group is even higher than expected, as many as 600,000 new dependents in the first year alone.

Relatedly, many employers believe that investigating ineligibles is no longer necessary. Full-time student verification of that age group was standard practice with most group health care providers, and with this demographic now under mandated coverage, why check at all?

The Effects of Health Care Reform

Statistics gathered from recently conducted dependent eligibility verification audits show the need still exists and is, in fact, greater than ever. Projects completed since the implementation of Health Care Reform guidelines show nearly double the number of ineligible dependents. The average number of ineligible dependents identified on group coverage has risen from 8% to over 15%.

The same ineligible dependents who existed prior to 9/23/10, excepting non-students, are still attempting to gain coverage from group plans. Dependents typically found who are not eligible for most plans include:

  • former spouses,
  • non-spouses,
  • former stepchildren,
  • grandchildren,
  • grandchildren over the age of 18 who are not enrolled in school,
  • non-child blood relatives and
  • non-eligible dependents declared on tax returns.

Additionally, Health Care Reform has created new potentially ineligible dependent types, namely spouses and adult children who have coverage on other plans.

Prior to Reform, approximately 24% of ineligible dependents fell into the age range of 19-26. Of that 24%, half are unable to prove relationship. Thus, only 12% of typical ineligible dependents were previously non-students and are likely to qualify for coverage as a result of the change in age requirements. To put that into perspective, if a hypothetical employer covers 1,250 dependents and falls in the middle ground of 8% ineligible, 100 dependents would exit the plan. Health Care Reform guidelines for adult children now make 12 of those eligible. The other 88 remain ineligible and underscore the importance of continuing to verify dependent eligibility in a post-Health Care Reform nation.

While the wider eligibility guidelines of PPACA do result in more dependents on a plan, the instance of and the exposure risk associated with ineligible dependents has not decreased. Rather, early results show that Health Care Reform directly correlates with higher percentages of ineligible dependents and, thus, an increased fiscal responsibility for CEOs and CFOs to recognize and eliminate fraud.

Case Study Results from Recent Dependent Eligibility Verification Audits:

Client A

Client B Client C

Client D


Transportation / Manufacturing

National Retail Chain Automotive Manufacturing

Hospital Management System – 15 hospitals

# Dependents


11,000+ 3,500


Grandfathered or Non-Grandfathered



Adult Children eligible for own employers’ plan were ineligible



2 Hospitals under “RomneyCare”

First Plan Renewal

9/1/2011, but implemented on 9/1/2010;

Age 26 compliant for 4 months at verification start


started verifying for HCR in mid-January


started verifying for HCR in mid-February



14.5% of dependents were ineligible, far higher than leadership expected

  • 20% increase in Open Enrollment numbers

  • Original project in 2009-2010 found 16.56% of 11,175 dependents were ineligible

  • First 4 months of PPACA showed that 30.57% of the 1,796 newly enrolled were ineligible
  • Original DEVA found 10.55% of enrolled were ineligible

  • Post-HCR DEVA found 27.91% of new enrollees were ineligible

  • Initial project:  10.1% ineligibles

  • 2 Hospitals excluded from initial verification because they were under RomneyCare. These did a DEVA after seeing other 13 hospitals’ results

  • Results were comparable: RomneyCare project:  6.34% ineligibles in one and 9.64% in the other

Financial Exposure Reduction

Over $184,960

  • Original project:  $4,995,000
  • First 4 months of PPACA: $1,482,300
  • Original project: $1,114,345
  • First 4 months of PPACA:$1,500,442

Total savings:  $4,165,246

A White Paper detailing final results will be available after all members of the study have been subject to PPACA regulations for six months or more. For more information about Health Care Reform or Dependent Eligibility Verification Audits, reach out to Vistage member Eric Helman, CEO of ContinuousHealth, at, or visit ContinuousHealth is an independent organization located in Atlanta Georgia that uses proprietary technology to help employers optimize their investments in employee benefits programs.  ContinuousHealth has performed over 250 Dependent Eligibility Verification projects. ContinuousHealth distributes its products through an exclusive network of certified Brokers and Consultants.

Category: Business Growth & Strategy

Tags:  , , ,

About the Author: Eric Helman

Eric Helman is the driving force behind ContinuousHealth's creation and growth. Eric founded ContinuousHealth in 2006 with the vision to lower the cost of employer-provided health benefits through the use of innovative technology. From its i…

Learn More

Leave a Reply

Your email address will not be published. Required fields are marked *