5 Things to Know About Student Health Insurance

Student health plans have long been available as a way for college students to obtain health insurance coverage. But prior to the Affordable Care Act (ACA), student health plans were very loosely regulated and the coverage was often inadequate if an enrollee experienced a significant medical event.

This article will explain how the ACA changed student health insurance, and what you need to know about health coverage if you or your loved one will soon be heading to college.

It's common for students to be covered under a parent's health plan, but as of 2009, there were an estimated 4 million college students who were uninsured. That had dropped to fewer than 1.7 million students as of 2016, thanks in large part to the ACA.

The ACA has made coverage more accessible to students and has also reformed the student health insurance plans offered by universities. Here's what you need to know:

1. Most student health insurance plans must be fully compliant with the ACA's individual market requirements. (There are some minor exceptions for all plans, discussed below, although they do not affect the enrollee experience. And self-insured student health plans, also discussed below, are not required to comply with the ACA.)

That means they must cover the essential health benefits with no annual or lifetime benefit maximums, and annual out-of-pocket expenses are capped.

Pre-ACA, low annual and lifetime benefit maximums were common on student health plans. Arijit Guha, who passed away in 2013, had a student health plan through Arizona State University with a $300,000 lifetime benefit maximum, which he met very early in his treatment. Scenarios like Guha's rarely occur now, as most student health plans cannot cap the amount they'll pay for essential health benefits.

In the 2017 Notice of Benefit and Payment Parameters, HHS clarified two aspects of the ACA that do not apply to student health plans: 

• Student health plans do not have to be merged into a carrier's single individual risk pool in the state, nor does a carrier have to merge the risk pools of all of its student health plans in a state. A school's student health plan can have its own risk pool, or can be further divided in a manner that does not depend on health status (e.g., graduate students could be in one risk pool and undergrads in another).
• For policy years starting on or after July 1, 2016, student health plans do not have to fit into the narrow actuarial value (AV) ranges defined by the ACA. Instead, they must simply have an AV of at least 60 (cover at least 60% of average costs), but their AV can be any number between 60 and 100, rather than needing to fit into the AV bands defined for metal-level plans in the ACA.

And in the 2019 Notice of Benefit and Payment Parameters, HHS finalized a rule change to exempt student health plans from the federal rate review process that applies to individual market plans. This was because universities are able to negotiate directly with the insurers, functioning more like a large group than an individual in that regard.

2. Colleges and universities can offer student health insurance plans but are not required to do so (note that they are required to offer group health insurance to their employees—but not their students—if they have 50 or more full-time equivalent employees). In 2007-2008, student health plans were offered by 57% of colleges, although that jumped to 82% if we only considered four-year public schools.

Once the ACA created several other avenues for students to obtain health insurance—and has increased the price of student health insurance because of the mandates that apply to the coverage—some schools decided to stop offering student health insurance plans.

Some schools opted to stop offering student health insurance because of the ACA requirement that health plans must cover contraceptives. But the Trump administration subsequently made it easier for religious schools to avoid the ACA's contraceptive mandate in their student health plans, and the Supreme Court upheld the Trump administration's rule in a 2020 decision.

So if contraceptive coverage is important to you, be sure you understand your school's coverage provisions. Depending on the school, they may or may not cover the cost of contraceptives.

3. In addition to student health plans offered by schools, there are several other ways students can obtain health insurance, most of which have been enhanced by the ACA:

• Young adults are allowed to remain on a parent's health insurance plan until they turn 26 (this applies regardless of whether they're in school). For many students, this is a good solution, but there are some caveats to understand: The parent's plan is not required to cover maternity benefits for dependents, and the parent's plan might not include network providers in the area where the student goes to school.
  
  Also, depending on how much the parent pays in premiums after any employer contributions, it may be more cost-effective for the family to have the student purchase individual health insurance or enroll in the student health plan. There's no one-size-fits-all answer.
• Medicaid eligibility has been expanded under the ACA, and 37 states plus DC have implemented the new eligibility guidelines. In those states, coverage is available with household income up to 138% of the poverty level, which amounts to $18,754 in 2022 for a single individual in the continental U.S.
  
  If your parents claim you as a dependent, however, their income will be taken into consideration too in order to determine eligibility (in that case, total household size will be based on the number of people that they claim on their tax return).
• Premium subsidies to offset the cost of individual health insurance are available in every state, through the exchange (note that subsidies cannot be used to purchase student health insurance offered by schools). Subsidy eligibility depends on the applicant's household income.
  
  Students are eligible to receive subsidies (assuming they're eligible based on income) regardless of whether their school offers student health insurance (in contrast, premium subsidies are usually not available when a person has access to an employer-sponsored plan).
  
  Subsidies ensure that the cost of a silver plan isn't more than a pre-determined percentage of the applicant's household income. Subsidies are available to applicants who aren't eligible for Medicaid and who have incomes of at least 100% of the poverty level. There is normally an upper limit of 400% of the poverty level, but the American Rescue Plan temporarily eliminated that, and the Inflation Reduction Act has extended that provision through 2025.
  
  As with Medicaid eligibility, students' household income includes total family income if the student is counted as a tax dependent.
• Employers with 50 or more full-time equivalent workers are required to offer affordable health insurance to their full-time (at least 30 hours per week) employees, or pay a penalty. So, for college students who also work full-time for a large employer, health insurance is almost certainly offered by their employers.

4. Some health plans that are marketed to students are NOT compliant with the ACA. This includes short-term plans and medical discount plans. Just because a plan's marketing materials claim that it's a good fit for students does not make it a student health plan. And as noted below, self-insured student health plans are not required to be compliant with the ACA, although most of them are.

5. If a school provides self-insured student health coverage to its students, the plan does not need to comply with the ACA. This was clarified by the Centers for Medicare and Medicaid Services in regulations that were issued in 2012. At that point, the agency estimated that there were about 200,000 students (at roughly 30 schools) who had coverage under self-insured student health plans.

As of 2019, there were approximately 297,000 students enrolled in self-insured student health plans (about 14% of the total number of students enrolled in all student health plans). But the majority of those plans appeared to be complying with the ACA anyway, as most of them "provide platinum level coverage."

Some do not, however. In the fall of 2019, BYU-Idaho generated a media firestorm when they notified students that they would no longer be able to waive the school's health plan if they were covered under Medicaid (the school soon reversed course and agreed to continue to allow students with Medicaid to waive the school's health plan).

BYU-Idaho's student health plan is self-insured and does not comply with the ACA, so Medicaid provides more comprehensive coverage. But the fact that BYU-Idaho's student health plan is not ACA-compliant drew considerable attention, and turned a spotlight on this particular compliance loophole.

Summary

Prior to the ACA, student health plans tended to have low lifetime benefit caps and often had gaps in the coverage. But the ACA created new consumer protections for student health plans, ensuring that these plans meet the same standards that the ACA also implemented for individual and small group plans. As a result, nearly all student health plans cover the essential health benefits with no dollar limit on how much the plan will pay. But self-insured student health plans do not have to comply with the ACA. And some students will find that another option—a parent's plan, an employer's plan, Medicaid, or a self-purchased plan—is a better fit for their needs.

A Word From Verywell

If you or a loved one are heading to college soon, health insurance should be on the list of things to figure out. You may find that staying on a parent's plan is the best option, but that's not always the case, especially if the plan doesn't have any in-network providers in the area.

If the school offers student health insurance, you can rest assured that the plan is almost certainly fully compliant with the ACA and provides comprehensive coverage. But you'll still want to read the fine print, as there are some exceptions to that and it's important to understand what is and isn't covered on any plan you're considering.