September 3, 2014

Elyria
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Elyria saves $216,000 on insurance plan by cutting ineligible dependents

ELYRIA — A first ever dependent audit of the city’s insurance plan revealed dozens of people who should not be on the city plan.

Richard Jackson, the city’s assistant safety service director in charge of human resources, said that as of Wednesday, close to 45 dependents who are no longer eligible for the city’s health insurance plan have been removed by the city employee holding the policy.

“A dependent audit had never been done in the city, but it is pretty common in the private world,” he said. “We were looking at the spouses and children of city employees and asked for verification, typically a marriage certificate or birth certificate.”

On average, Jackson said $4,800 a year in claims is paid per person insured. The savings garnered by cutting down on the number of insured persons is roughly $216,000.

In nearly all the cases, Jackson said the ineligible dependents turned out to be former spouses or adult children who have access to insurance through their employer.

“I don’t believe anyone was trying to defraud the city. Something like that would stick out,” he said. “I believe employees were simply never asked to provide the information before, so they didn’t. We are talking about divorced people who never notified payroll or a child that has graduated from college and moved away from home.”

Jackson said there are two laws that govern how long a dependent can stay on a policyholder’s insurance plan. The federal government says to the age of 26, but state law believes 28 is a more adequate age if the person can still be claimed as a dependent and lives at home.

“We didn’t kick anyone off the plan,” Jackson said. “The policyholders provided the information and they identified for themselves who should be covered and provided the necessary documentation to verify it.”

Federal mandates governing health insurance go into effect Oct. 1, but Jackson said the dependent audit has been in the works for the city for more than a year. It was seen as a way to cut back on the city’s health insurance budget as well as eliminating the liability of insurance for those ineligible.

The city is a self-funded insurer, meaning it pays the full claims of its employees and their dependents. Both employees and the city contribute to the health fund each year and it is administered through a third-party insurer.

Contact Lisa Roberson at 329-7121 or lroberson@chroniclet.com.