is widely acknowledged that employers do, from time to time, put
friends or (ineligible) family members, former employees or others
on the group medical plan. While this may be a noble act, it carries
the decided risk of complete destruction of your group medical plan,
to say nothing of potential litigation from other affected employees,
the insurer, the state insurance department, even the individual
you sought to help. Should the insurer discover an ineligible enrollee
who is in the midst of treatment, the payments cease immediately
and you and/or the individual are now subject to pursuit by the
insurer for amounts paid. There is actually little of record in
the way of litigation by insurers against employers to recover payments.
That will, however, almost certainly change as carriers improve
their detection, and is only one of several potentially disastrous
consequences. The word insurance companies use for it is FRAUD.
this practice most commonly occurs where people are having difficulty
finding insurance due to existing medical conditions, the potential
for catastrophic claims that will adversely affect your group is
huge. In many cases it goes undiscovered and claims get paid without
dispute. When the amounts are large enough, however, insurer suspicion
may be very much in play.
do not, as a general rule, monitor eligibility on a continuous basis.
They do, however, periodically select small group medical plans
for eligibility audits. One of the large carriers recently selected
out 739 small groups and found 37% of them with ineligibles.