Booting the Ex-Spouse

Here's one way employers are saving money on health care costs: Booting dependents from insurance plans.

More precisely, they are weeding out ineligible dependents, the Washington Post reports. Virginia, Johns Hopkins University, and the Navy Federal Credit Union are among employers the Post cites as recently stepping up efforts to kick out grown children, ex-spouses, and other people who shouldn't be insured by worker health plans.

The strategy is one big companies like AT&T Inc. and Ford Motor Co. used for years, saving millions. (The Post says its own managers are auditing dependent coverage.) Three years ago, AT&T identified 50,000 ineligible dependents from a pool of 650,000. Yanking their insurance saved the company $100 million a year, David Chojnacki, a consultant for the company, tells the Post.

This is a good example of companies taking aggressive steps to control their health care costs. Self-insured employers, in particular, are finding places to cut and curb spending. While prevention is a mantra for many employers, harder-line tactics like dropping coverage work too.

"It's part of our fiduciary responsibility to control health plan costs," Johns Hopkins senior director of benefits Heidi Conway tells the Post. An audit of 14,000 worker spouses and dependents found more than 450 ineligible people. By dropping them, the university saves around $2 million a year, Conway says.

Some employers found that up to 11 percent of the dependents they cover aren't eligible, says Greg Mansur, leader of the audit practice at consulting firm Watson Wyatt. More than 60 percent of big employers surveyed recently by Watson Wyatt say they're auditing insured dependents. That's up from around 40 percent just two years ago, Mansur says.