Health Insurance

Control Objectives for Health Insurance

(a) To provide an authorised and cost effective health insurance scheme for
eligible staff;
(b) To ensure that only eligible staff become members of the scheme;
(c) To ensure that premiums paid by the company are correctly calculated,
authorised, relative to actual membership, accounted for, and are competitive;
(d) To ensure that any additional contributions made by employees are
correctly calculated, received and paid over to the scheme;
(e) To ensure that the provision of the scheme fully complies with all the
relevant legislation and taxation regulations;
(f) To ensure that claims against the scheme are correctly routed and dealt
with;
(g) To prevent the processing of invalid or excessive claims so as to contain
the operating costs to the organisation; and
(h) To ensure that management periodically review the performance and costs
of the scheme so as to ensure that it continues to represent good value for money.

Risk and Control Issues for Health Insurance

1 Key Issues

1.1 Has the scheme been suitably authorised and the costs justified and
negotiated on the best terms?
1.2 Have appropriate membership eligibility rules been established, and
are only eligible employees accepted for membership at the appropriate
time?
1.3 How can management be assured that the operation of the scheme
complies with all the relevant legislation and current taxation regulations?
1.4 How are the organisations premiums calculated and does this
process represent the actual level/type of membership?
1.5 How can management be sure that he premiums represent good
value for money and that they are competitive (i.e. are they subject to
review by management upon renewal)?
1.6 Are all premium payments authorised, recorded and adequately
accounted for?
1.7 Are all scheme claims assessed for validity and recorded as passed
over to the scheme providers?
1.8 Are excessive or invalid claims identified and prevented from being
processed?

2 Detailed Issues

2.1 What processes prevent the acceptance of unauthorised, ineligible, invalid

or high risk scheme members?
2.2 Has the responsibility for administering the scheme been allocated?
2.3 Have realistic and economic benefit limits been established (as a means to
contain the premium costs), and are members fully aware of any such limits to
scheme coverage?
2.4 Is the scheme arranged with a recognised, stable and reliable provider?
2.5 Is the performance of the scheme provider monitored and regularly
assessed for value for money, etc.?
2.6 How can management be certain that any available company taxation
advantages of the scheme are appropriately and legally exploited?
2.7 When applicable, are the individual member's personal benefit taxation
liabilities accurately recorded and reported to the relevant authorities (i.e. as for
P11D returns in the UK)?
2.8 How can management be certain that the premiums paid by the
organisation are accurately based upon the actual scheme membership (i.e.
excluding staff leavers)?
2.9 Are additional premiums to be paid directly by members correctly
calculated, deducted, paid over and accounted for?
2.10 How is accuracy of data input from other systems (i.e. human resources
or payroll) confirmed?
2.11 How is the accuracy of data output to other systems (i.e. General Ledger)
confirmed?