FEHB dependent fraud and the case for dependent audits

A federal employee enrolled his “wife” and “stepchild” in his government health plan. Neither was eligible. No one checked. The FEHB program paid more than $100,000 in claims over about 12 years before it was caught.

That case isn’t an outlier. A 2023 GAO report found OPM had no mechanism to identify or remove ineligible family members, and estimated the problem could cost the program up to $1 billion a year. OPM’s own pilot data found roughly 3% of 4 million enrolled family members were ineligible. That’s 120,000 people.

Congress responded. OPM published a final rule yesterday implementing the FEHB Protection Act of 2025. Starting July 2, any federal employee who adds a family member to coverage, even during open season, has to submit documentation proving eligibility. Birth certificates. Marriage certificates. Tax returns. Proof moves from something a carrier may request to something the enrollee must provide.

Private employers have been doing this voluntarily for years. Dependent eligibility audits routinely find 3 to 8% of enrolled dependents are ineligible, at thousands of dollars per person annually.

Private plans have no federal mandate under the rule, but ERISA’s fiduciary duty gets you to the same place. You administer the plan according to its terms, and that means benefits flow only to eligible participants. Covering an ineligible dependent is a plan administration failure, and it carries real legal exposure.

When did you last run a dependent eligibility audit?