According to the GAO, ineligible family members covered by the Federal Employee Health Benefits (FEHB) Program could be costing the government $1 billion every year.
Two Republican Senators, Rick Scott of FL and Ron Johnson of WI, asked the Government Accountability Office (GAO) to look into the cost of ineligible family members receiving coverage from FEHB plans. After looking into the matter, GAO found that the Office Personnel Management (OPM) lacked both oversight and information regarding the matter.
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OPM admitted that they don’t have precise data regarding the number of ineligible individuals, which in turn makes any oversight of the issue difficult. Agency HR offices and FEHB insurance carriers are enabled by OPM to identify and remove ineligible spouses and dependents from a federal employee’s FEHB plan. But once a family is already covered, and subsequently becomes ineligible, there doesn’t seem to be a diligent process for identifying and removing them. Improper payment to these family members from FEHB could be costing the FEHB program, funded by the government and employees themselves, around $1 billion each year. The inclusion of these family members as well increases FEHB premiums across the board as those prices are based on all participants’ cumulative claims, administrative costs, and more.
However, there is some disagreement over the $1 billion figure. Although not verified by the GAO, the Office of the Inspector General (OIG) provided an estimated range of $250 million to $3 billion. Where the actual dollar amount lies is significant, because conducting a dependent eligibility verification audit (DEVA) would cost the FEHB program $360 million to $1 billion anyway. According to Rick Scott, when he was the Governor of Florida, they performed a DEVA on the state’s group health insurance program, resulting in a savings of $20 million.
GAO Recommendations
OPM ultimately agreed with the GAO report’s recommended courses of action to improve the problem. These items included building two monitoring mechanisms and preforming an assessment of fraud risk. One of the new monitoring procedures would be to ensure agencies and FEHB carriers are removing ineligible dependents, and the other would be for OPM to identify and remove these ineligible family members itself. The assessment would review the impact of fraud risk related to these improperly covered spouses and children, and once completed, the assessment is to be filed under the FEHB program’s fraud risk profile.
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**Written by Benjamin Derge, Financial Planner, ChFEBC℠ The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.
