GM Goes After Ineligible Dependents

When companies provide employees with family health insurance coverage, the employees can include spouses and dependent children up to a specified age under the policy. Grown children, ex-spouses, parents, grandparents, boyfriends, girlfriends, and children of friends or neighbors are not allowed.

General Motors, faced with an annual healthcare bill of almost $5 billion, is looking to trim some of that tab by getting rid of any ineligible dependents on its health insurance rolls. The company has asked its hourly employees to voluntarily remove from their policies any dependents that should not be covered.

If projections by the human resources firm HRAdvance hold true, GM stands to lop anywhere from $25 million to $50 million from its healthcare costs. The company, which conducts dependent-eligibility audits, estimates that 5% to 10% of the dependents that employees list on company-provided health plans are ineligible. According to HRAdvance, hospitals rank high in carrying ineligible dependents; one hospital audit found that close to 20% of the dependents on the hospital’s health insurance rolls shouldn’t have been there.

A company that finds ineligible dependents on its health insurance rosters faces a choice of what to do about it. Most opt for voluntary removal of those dependents coupled with an educational campaign. Others take a harder line, often asking employees to pay back any health benefits the company paid out that it should not have. According to a company spokesperson, GM may pursue the latter approach.