Let’s start with the hard truth: Fudging benefits rules, even just once, can have massive financial consequences.
Maybe it’s letting a part-time employee slide into full-time benefits. Maybe it’s extending coverage a little longer than you should. Or maybe, like one HR manager we worked with recently, it’s a parent who didn’t notify the company in time to add their newborn baby to the plan.
These are real situations. In a self-funded health plan, they can cost your company tens, even hundreds of thousands of dollars.
In this post, we’ll break down:
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Why eligibility rules matter (yes, even the ones that feel harsh)
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How tech can help automate and protect the process
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The real cost of looking the other way
A story that says it all
A self-insured association health plan client recently came to us with a tough request: an employee had just had a baby but missed the window to add the child to the health plan. Could we help add the baby retroactively?
The association responded with: "Technically, yes." But there was a major caveat: If that baby had a claim over $100,000, the stop-loss insurance wouldn’t cover it. The group—not the insurance—would be responsible.
After discussing the risks, the HR manager made the hard decision to follow the plan’s rules. It wasn’t easy, but it was the right financial choice.
Why eligibility oversight is a big deal
1. It protects your bottom line
Every ineligible dependent, whether it’s a 26-year-old kid still on the plan or a divorced spouse from 2019, adds direct cost to your claims.
And if the stop-loss carrier discovers they were ineligible? You could lose your reimbursement for high-dollar claims. One dependent could easily cost $3,500–$4,500 per year in just routine care or a lot more if something big happens.
2. It keeps you compliant
ACA, ERISA, CAA, Section 125—all these regulations require that you follow clear rules. Deviating from your plan document (even with the best intentions) can result in penalties, audits, and even lawsuits.
One common trap is divorce decrees. Just because someone is required to pay for insurance in a divorce settlement doesn’t mean they’re eligible to stay on the employer’s plan.
Your tech can be your safety net
Integrating your payroll system with your benefits admin platform (like Employee Navigator) is critical and can help you follow the plan rules.
When everything is connected:
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Eligibility rules are programmed into the system
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Changes are automatically communicated to carriers, TPAs, and COBRA vendors
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New hires, terminations, and qualifying life events are processed faster and more accurately
It takes a lot of guesswork and human error out of the process.
But remember: Technology is only as good as your oversight. You should still audit eligibility monthly, review audit reports, and flag anything that looks off.
Why fudging the rules isn't worth it
We’ve all wanted to say "yes" to an employee who’s in a tough spot. But adjusting a termination date or bending the rules for a part-time worker risks your plan and sets a precedent that’s hard to undo.
Plus, it undermines the integrity of your plan, risks triggering stop-loss denials, and adds administrative confusion and cost.
Take control of your eligibility process
Here’s what we recommend:
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Train your HR team and managers on eligibility rules
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Educate employees on their responsibilities
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Audit eligibility reports monthly
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Integrate your systems and double-check the logic
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If you’re not sure your eligibility process is watertight (or your systems are fully connected), let’s chat.We help employers tighten up eligibility, integrate systems, and stay compliant—without losing the human touch.
Schedule a call with us here.
