In 2012, the Department of Health and Human Services (HHS) issued a final student health coverage rule. This rule extends to student plans all the protections the Affordable Care Act offers to enrollees in individual market plans, with several adjustments due to the unique nature of student plans:
Annual limits. The Affordable Care Act banned annual dollar limits on all health plans starting on January 1, 2014. Plans issued or renewed beginning January 1, 2014 or later cannot have annual dollar limits on coverage of “essential health benefits.” However, that does not mean that your plan has no limits—it just can’t limit coverage of “essential health benefits.” These include services in ten essential areas, including outpatient care; emergency room visits; inpatient care; pre- and post-natal care; mental health and substance use disorder services; prescription drugs; rehabilitation services and devices, including physical and occupational therapy and more; lab tests; preventive services; and pediatric services, including dental and vision care for children under the age of 18.
Medical Loss Ratio (MLR). The Affordable Care Act requires health insurance issuers to submit data on the proportion of premium revenues they spend on clinical services and quality improvement, also known as the medical loss ratio (MLR). The ACA requires insurance companies to spend at least 80 percent or 85 percent of premium dollars on medical care. Companies that fail to meet these standards must provide a rebate to their customers.
Notice Requirement. For student policies that don’t meet the ACA’s minimum annual limits requirement, the policy itself and other plan materials must include a statement to that effect. They must also notify students that they may be eligible for health coverage as a dependent under their parents’ employer plan or individual market coverage if they are under the age of 26.
Things to Keep in Mind
Self-funded plans (or plans funded by an institution such as a university, rather than an insurer) typically do not have to meet the requirements of the ACA. Therefore, the annual loss limit, medical loss ratio and notice requirement rules above do not apply to self-funded student health plans.
Covering your college-bound child under your existing policy could prove the simplest and most cost-effective way to provide quality coverage. The ACA requires health insurance policies that cover children, whether employer group plans or individual market family plans, to allow children to stay on a parent’s plan until they turn 26 years old. Children can join or remain on a parent’s plan even if they are:
- not living with their parents
- attending school
- not financially dependent on their parents
- 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 going out of state, 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, up to the limits of coverage. The policy covering your child as a dependent would be the secondary payer, paying claims after the primary plan had paid its share. Even with two policies, all your costs might not be covered.