Fraud in the Workplace? Evidence from a Dependent Verification Program
Many employers have implemented dependent verification (DV) programs, which aim to reduce employee benefits costs by ensuring that ineligible persons are not enrolled in their health plan as dependents. We evaluate a DV program using a panel of health plan enrollment data from a large, single-site employer. We find that dependents were 2.7 percentage points less likely to be reenrolled in the year that DV was introduced, indicating that this fraction of dependents was ineligibly enrolled prior to the program's introduction. We show that these dependents were actually ineligible, rather than merely discouraged from re-enrollment by compliance costs.
We are grateful for invaluable advice to the human resources experts at the (unnamed) employer whose data were used in this paper, to Peter Perdue for outstanding research assistance, to Janet Holtzblatt, Jonathan Meer, and Katherine Swartz for useful suggestions, and to Princeton's Griswold Center for Economic Policy Studies for financial support. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.