...health/dental insurance? What if this is revealed? I don't want to loose my coverage because of their poor decisions.
Employer is well aware. Person does not work for company nor are they an eligible dependent.

Stop trying to be a snitch. Mind your own business. You now know it doesn't affect you. So let it go.

Your coverage shouldnt be affected, however your employer should be made aware of this employees ineligibility

how do you know they are ineligible?