PERS TRS Dependent Eligibility Audit White Paper 032408

STATE OF ALASKA SARAH PALIN, GOVERNOR DEPARTMENT OF ADMINISTRATION P.O. BOX 110200 JUNEAU, ALASKA 99811-0200 ANNETTE KREITZER, COMMISSIONER PHONE: (907) 465-2200 FAX: (907) 465-2135 PERS/TRS Dependent Eligibility Audit White Paper March 24, 2008 History/Background The issue of ineligible dependents arose in 2004 when it was discovered that the Division of Retirement and Benefits had not been enforcing the statutory school enrollment requirement for retiree dependents over the age of 19. As legislation was being drafted to create a Defined Contribution Retirement Plan, the Division realized no audits had ever been conducted of dependents in either the active or retiree plans. Members were notified that dependents on the active and retiree plans would have to prove eligibility and re-enrollment deadlines were set. Immediately after the re-enrollment deadlines (June 30, 2005 for active employees and June 30, 2006 for retirees,) it appeared that approximately 3,100 active employee dependents and 4,300 retiree dependents had been incorrectly covered. During the following 12 months, about half of these dependents were re-enrolled as eligible dependents. This often happened because a member failed to provide the evidence for dependent coverage until after a claim event. Also, some of those dependents may have become ineligible for coverage after the eligibility audit, but were eligible when a prior claim was paid. A good example ...