Dependent Verification Saves CalPERS Millions in Health Care Costs

The California Public Employees’ Retirement System (CalPERS) has completed its Dependent Eligibility Verification (DEV) project, and it will achieve savings and cost avoidance close to $122 million.

Citing data as of September 1, 2015, CalPERS staff reported to the Board of Administration’s Pension and Health Benefits Committee that the project resulted in more than 18,000 ineligible dependents being removed from employer-sponsored health care provided by CalPERS to state agencies, public agencies, and school districts contracted with CalPERS for health coverage. The projected savings will be in reduced employer health premium contributions as well as avoiding the cost of health care claims for ineligible dependents.

“The project and its expected cost savings are part of CalPERS’ ongoing endeavors to help our employers and members manage their health care costs,” says Priya Mathur, chair of the CalPERS Pension & Health Benefits Committee.

The CalPERS DEV project began in March 2013 with an amnesty period that ended June 30, 2013, during which employees and retirees could voluntarily remove ineligible dependents from their employer-sponsored health coverage. The system then used the contracted services of HMS Employer Solutions to conduct a nine-cycle eligibility verification process of state, public agency, and school district employees and retired annuitants. All active employees and retired annuitants enrolled in a CalPERS health plan were asked to provide specific documentation, based on dependent type, to verify that their dependents are eligible for health coverage.

“The number of ineligible dependents eliminated from health coverage amounted to just over 2.5% of the overall dependent population of more than 700,000, and eliminating those who were ineligible generated the success of the project,” says Doug McKeever, CalPERS’ Deputy Executive Officer for Benefit Programs Policy and Planning.