3,100 Minnesotans lose state health insurance after an audit

  • Article by: DANIELA HERNANDEZ , Star Tribune
  • Updated: August 15, 2012 - 12:19 AM

Some dependents may regain coverage but will face costly gap.

About 3,100 Minnesotans have lost state-provided health insurance after a special audit of public employees and their dependents, but hundreds may have been cut off simply because they failed to submit required paperwork.

The audit, conducted by the Minnesota Management and Budget agency, was designed to save the state money by weeding out relatives ineligible for state coverage. But up to half may have lost insurance because they missed the deadline or submitted incomplete or improper documentation.

In some cases, a termination letter was the first notice families had of the audit, said Eliot Seide, executive director of AFSCME Council 5, a large union representing state employees. The union is filing a class-action grievance on behalf of 12 state workers who say their dependents are eligible but lost their insurance due to technicalities.

"That's only the tip of the iceberg," Seide said.

Agency spokesman John Pollard said the state sent employees several notices and extended the deadline to file. Most families did get their paperwork in on time. A total of 75,000 dependents were contacted.

But some may not have seen the notices, or perhaps mistook the envelopes for junk mail. For employees whose documents are in other states or countries, getting the proper documentation in time might also have been an obstacle.

Tom Heck and his two sons were among the 1,600 Minnesotans who lost benefits because their families failed to turn in paperwork. Heck says he and his wife, a professor at St. Cloud State University, didn't realize they were being audited until they received a letter last week informing them that Tom and his sons no longer had coverage.

"We flat out missed it,'' Heck said. "There has to be some burden on our shoulders," but months without coverage seems excessive, he said. He and his sons should be able to get back on his wife's plan when open enrollment begins in November, with benefits starting in January.

In the meantime, people in the Hecks' situation can extend their coverage under a federal provision known as COBRA, but would be charged the full monthly premium, which can top $1,000. State employees earn an average of $38,000 a year, so that cost could be prohibitive for many families, Seide said.

State workers and their families can appeal the decision. The agency's goal, Pollard said, is that Minnesotans get the proper coverage. Some people's benefits have already been reinstated, but he could not say how many.

Budget savings

The audit, begun in March, was part of a 2010 law meant to help reduce the state budget deficit.

Minnesota paid HMS Employer Services, a health care cost-containment company, $400,000 to conduct the one-time audit, which is expected to save the state about $10 million. Similar audits have been done in other states.

HMS estimates that between 4 and 8 percent of dependents covered by employer-sponsored insurance are ineligible. If most of the 1,600 Minnesotans who were dropped for failure to turn in documentation are reinstated, that rate would be lower in the state.

The long-term savings would also be smaller, though the state would still get a "huge rate of return," said Sen. Dave Thompson, R-Lakeville, who supported the original provision.

Thompson declined to speculate on what might happen to those who lost coverage, but said they should get their benefits back if they're eligible.

"Folks who are not eligible dependents shouldn't be on the state system," he said. "We were successful."

Daniela Hernandez • 612-673-4088

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