CalPERS Seeks To Drop Health Benefits for Ineligible Individuals
CalPERS is seeking to discontinue benefits for tens of thousands of individuals that officials believe are mistakenly or fraudulently receiving health insurance through the pension fund, the Sacramento Bee reports.
Experts say that most individuals who improperly receive health care benefits under CalPERS are doing so because of legitimate mistakes, such as when:
- Children are not dropped from the pension fund's health plan at age 26; or
- Employees mistakenly continue covering spouses or ex-domestic partners who do not qualify as dependents.
Estimated Savings From Discontinuing Benefits
Last year, CalPERS officials predicted that denying benefits to an estimated 29,000 individuals who improperly receive health insurance would save approximately $40 million annually.
However, early returns from an initiative launched last month suggest that savings might double previous estimates.
Karen Frost -- a benefits administrator expert at human resources firm Aon Hewitt -- said projections that 4% of the 739,000 dependents on CalPERS' health plan do not qualify for coverage were "very conservative."
Details of Initiative
Bill Madison -- a CalPERS spokesperson -- said that the new CalPERS initiative will require verification of every dependent. He added that the agency expects that the California Office of Human Resources and local governments "will take steps to ensure dependents enrolled in our health plans are eligible, as will CalPERS."
In a letter sent to 390,000 CalPERS members last month, the pension fund asked policyholders to drop ineligible beneficiaries voluntarily by June 30.
The letter states, "If we discover ineligible dependents during the verification period or if you fail to provide appropriate documentation for eligible dependents, those dependents will be removed from your health plan, and you may be liable for health care costs incurred for them."Rosanna Westmoreland -- a CalPERS spokesperson -- said that if cases of fraud are discovered, CalPERS will refer them to a district attorney for prosecution (Ortiz, Sacramento Bee, 5/7). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.