Does Your Plan Make the Grade?
The Affordable Care Act requires every non-institutionalized American citizen to have “essential minimum” health insurance, unless you qualify for an exemption.
If your student health plan is written by an insurer, it must meet the ACA’s coverage requirements
Student Health Plans
The Affordable Care Act (ACA) applies to student health plans as of January 1, 2014. As a result, health insurance for college students under some plans has improved. All student health plans must now provide the “essential minimum benefits” required by the ACA. They also cannot put annual or lifetime limits on coverage of these essential minimum benefits.
Beware, though. The ACA’s implementing regulations define “student health insurance coverage” as individual health insurance written by a health insurer. If your student health plan is written by an insurer, it must meet the ACA’s coverage requirements, so you needn’t worry about penalties.
If a college or university self-insures its student health plan, the ACA does not apply. To avoid penalties, determine whether your child’s college’s plan qualifies as “minimum essential coverage” by reading the plan documents. Any health plan that does not meet the ACA’s coverage requirements must clearly say so in the plan’s summary of benefits and coverage (SBC). Both fully insured and self-insured plans must provide a copy of the SBC to all participants.
The ACA Affects Costs
Student health plans traditionally cost very little as compared to other health insurance plans. Insurers can charge less to cover them, because most students are young and healthy and, as a group, they incur fewer costly claims. Many plans also provided minimal coverage.
Now, fully insured student health plans must provide more benefits. In addition to removing annual and lifetime coverage limits, the ACA requires health plans to “take all comers,” regardless of their health status. It also requires all health plans to cover certain preventive care services (such as vaccinations, screenings for conditions like diabetes, and more) with no deductible or copayment.
As you might expect, the additional coverage has made student health plans more expensive. The average cost of student health plans rose 9 percent at public colleges and universities and 7.8 percent at private colleges and universities between the 2011-2012 and 2012-2013 school years, according to a study by Hodgkins Beckley Consulting. (Source: USA Today, January 11, 2014) This compares to premium increases averaging 4 percent for single-only coverage under employer group plans between 2012 and 2013. (Source: Kaiser Family Foundation, 2013 Employer Health Benefits Survey)
Still, student health plans might prove less expensive than individual coverage through the health insurance marketplace. Student health plans cover a generally young, healthy population, making coverage relatively inexpensive. On the insurance marketplaces, younger, healthier people typically subsidize the cost of covering older, sicker people.
Your Family Plan
The ACA requires health plans that provide coverage for children to allow them to stay on their parent’s plan until they reach age 26. This is true even if your children are married, not living with you, not financially dependent on you, attending school or eligible to enroll in their employer’s plan.
Adult children may be enrolled during a plan’s open enrollment period or during other special enrollment opportunities. Your employer or insurance company can provide details.
If your child is far away, check your plan’s list of network providers to see whether it includes any near your child’s college. Many PPO plans will cover the cost of services from non-network healthcare providers, but at significantly lower percentages. This could greatly increase your out-of-pocket costs. Similarly, an HMO plan might consider your child’s college out of its service area.
Some families buy student health insurance and keep their child on the family plan. When you have more than one applicable insurance policy, “coordination of benefits” rules decide which one pays first. When a plan covers an individual as a subscriber rather than a dependent, it typically becomes the primary plan. In this case, the student health plan would pay what it owes on your student’s bills first. Once that plan pays up to the limits of coverage, your family policy would pay as the secondary payer. Even with two policies, all your costs might not be covered.
Marketplace Policies
Even if your student is eligible for coverage under your family’s plan, buying an individual policy for him/her might save you money. You or your student may qualify for subsidies based on income.
With the ACA, you must wait until an open enrollment period to apply for new coverage. The next open enrollment period will begin in the fall for coverage that will start in January 2015. Certain life changes qualify a person for a “special enrollment” outside the open enrollment period. Qualifying events include marriage, moving out of state, and loss of other coverage.
Related article: Insuring Your College Student’s Belongings
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