5 Things to Know About Student Health Insurance

Student health plans are still around, but the ACA has changed them

College student in library
Under the ACA, student health insurance is more robust, but also more expensive. It's also made other avenues for coverage more accessible. Redrockschool/Getty Images

Student health plans have long been available as a way for college students to obtain health insurance coverage. Most students are covered under a parent's health plan, but historically, about 20 percent of college students were uninsured. The Affordable Care Act 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. Student health insurance plans must be fully-compliant with the ACA's individual market requirements (but there are some minor exceptions, discussed below). This means they have to cover the essential health benefits with no annual or lifetime benefit maximums (the ban on benefit limits took effect later for student health plans than for the rest of the individual market but was fully in place by 2014), 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 no longer occur, as student health plan cannot cap the amount they'll pay for essential health benefits.

In the 2017 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 (i.e., bronze plans have AV between 58 and 62 percent, silver plans have AV between 68 and 72 percent, etc.). Instead, they must simply have an AV of at least 60 (cover at least 60 percent 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.

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 percent of colleges, although that jumped to 82 percent if we only considered four-year public schools.

Now that the ACA has 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 have decided to stop offering student health insurance plans. This includes schools that have opted to stop offering student health insurance because of the ACA requirement that health plans must cover 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 30 states plus DC (and soon, Louisiana) have implemented the new eligibility guidelines. In those states, coverage is available with household income up to 138 percent of the poverty level, which is $16,394 in 2016 for a single individual. 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. 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 percent of the poverty level, but no more than 400 percent of the poverty level (for 2016 coverage, the 2015 poverty level guidelines are used). 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. 

5. Student health insurance is not considered a group health insurance plan, and this impacts graduate students who receive a student health insurance premium reimbursement. Under regulations that took effect in 2014 (but were subsequently delayed until 2015), employers are not allowed to reimburse employees for individual health insurance premiums. Universities are clearly not allowed to pay for student health insurance premiums for their full-time employees (since the student health plans are not considered group coverage), but there was confusion about how this applied with regards to students who also work for the school.

Many universities provide students (generally graduate students) with stipends, and the students serve as teaching assistants and research assistants. In addition to tuition reimbursement and stipends to cover living expenses, it's also common for universities to pay all or a portion of the graduate student's premium under the school's student health plan. Under the regulations prohibiting employer reimbursement of individual premiums, the penalty for non-compliance is a fine of $100 per day, per employee (i.e., up to $36,500 annually, per employee).

Obviously, the question becomes whether or not graduate research assistants and graduate teaching assistants are employees, and whether or not the university is running afoul of the ban on reimbursing employees' non-group health insurance premiums by paying a portion of the students' premiums. In February 2016, the IRS published Notice 2016-17, which provides transitional relief for universities that are paying student health insurance premiums on behalf of graduate students who also work at the school. For plan years that start before January 1, 2017, the IRS will not take action against a school utilizing this sort of arrangement (so a plan year that follows the 2016-2017 academic year calendar will still be in compliance even if the school is reimbursing the student's student health insurance premiums). 

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