A new fall semester is underway, and along with the classes and football games and study sessions, college students have plenty to consider when it comes to their health insurance policies.
Many colleges offer health insurance policies to their students. Usually the plans are administered by a health insurance carrier that contracts with the school, but some colleges self-insure and administer their own student plans. Most schools require students to show proof of acceptable health insurance coverage or purchase the school’s health plan.
In the past, student health plans were infamous for having low annual or lifetime benefit maximums. The policies often had low deductibles, but could also leave students woefully under-insured in the event of a serious illness or injury. The GAO found that 96 percent of student health plans had lifetime coverage limits in 2007/08, and 24 percent also had annual benefit limits.
ACA mandates essential benefits
Happily for students and their families, the ACA has impacted student health insurance in much the same way that it has changed the individual health insurance market. There are some different transitions leading up to 2014, but the days of low lifetime and annual limits on “essential health benefits” in student plans are a thing of the past. (Self-insured student health plans are not impacted by the ACA, but many have chosen to comply with new regulations anyway. Be sure to read the fine print on your school’s plan if it’s self-insured coverage.)
Essential health benefits are health care services that the ACA deemed the most important. They must be covered – with no lifetime or annual limits – by all policies (including student plans) with plans years that start on or after January 1, 2014. They include:
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Mental health and substance use disorder services, including behavioral health treatment
- Prescription medications
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services (at no cost to the insured) and chronic disease management
- Pediatric services, including oral and vision care
With limited exceptions, the ACA also requires student health plans to cover contraceptive care for women with no cost sharing.
For student health plans, the requirements for annual coverage limits are a little different from the rest of the individual market leading up to 2014. For policy years that started between July 1, 2012 and September 23, 2012, essential benefits had to be covered with an annual limit of no less than $100,000. For plan years starting after September 23, 2012 but before January 1, 2014, the annual benefits must be at least $500,000 for essential health benefits. Plans purchased or renewed on or after January 1, 2014 can no longer have annual limits on essential benefits. So for example, a plan that starts or renews on August 25, 2013 can have an annual limit of $500,000 on essential benefits until that plan renews on August 25, 2014. At that point, the annual benefit maximum would have to be eliminated for all essential benefits.
Lifetime maximums on essential health benefits were required to be removed entirely on policies with plan years beginning after July 1, 2012 (so as of July 1, 2013, all non-self-insured student health plans had removed their lifetime limits on essential benefits).
Coverage through parents’ plans
In addition to improving student health plans, the ACA also allows young adults to remain on their parents’ health insurance through the age of 26. For many students, this covers them the entire time they are in college. It’s not necessarily the most cost-effective solution though. If the parent’s employer requires employees to foot the bill for their dependents’ coverage, it may be more expensive than a student health plan offered by a university.
Plans available through exchanges
Students also have the option to purchase individual plans in the exchanges. Income-based subsidies are available to help pay for coverage and reduce cost-sharing, but they may not be available to students who have access to coverage on a parent’s plan (eligibility depends on the cost of the parent’s coverage relative to their household income). Catastrophic plans are available in the individual market for people under the age of 30, but subsidies cannot be applied to the premiums or cost-sharing on catastrophic plans.
Just as it did in the individual health insurance market, the ACA has strengthened consumer protections in student health plans. Policies purchased or renewed after January 1, 2014 will provide real safety nets in case of significant medical bills, and students also have access to coverage on their parents’ plan or a subsidized plan in the health insurance exchanges.