Q. I’m trying to decide whether I would be better off enrolling in the plan my college offers, buying my own health insurance in the exchange (where I may get a subsidy) or remaining on my mother’s plan.
A. You will have to compare benefits and costs, as there’s no one-size-fits-all answer in this circumstance. Here are a few things to keep in mind:
Student health insurance
Nearly all student health plans offered by colleges and universities are fully compliant with the ACA, with just a few exceptions that don’t really affect the enrolled students. The exceptions are that
- they don’t have to be merged with the carrier’s other plan in the state for risk pool purposes,
- they’re not required to fit into the narrow actuarial value (AV) ranges that apply to other individual market plans, and
- they’re exempt from the federal rate review process that applies to other individual market plans.
For all intents and purposes, however – particularly from the enrollee’s perspective – the plans are fully compliant with the Affordable Care Act. So they cover pre-existing conditions, provide preventive care with no cost-sharing, include coverage for the essential health benefits, and do not have annual or lifetime benefit caps.
Note, however, that if a student health plan is self-insured, it doesn’t have to be compliant with the ACA; some schools with self-insured student health plans, which covered about 1% of college students as of 2012, have opted not to bring their plans into compliance with the ACA.
The premium subsidies (premium tax credits) provided by the ACA cannot be used to offset the cost of student health insurance offered by your college or university. Whatever the premium is, you’ll have to pay it in full in order to have coverage in place. But student loans and scholarships, if available, can typically be used to cover the cost of the student health plan, since it will be bundled with the rest of the student’s college expenses.
Staying on your parents’ plan
You’ve got an option to remain on your parents’ health plan until you turn 26, regardless of whether your parents claim you as a dependent for tax purposes. That might work out well for you and your family, but it’s important to note that the plan’s network might not include hospitals and doctors in the area where you’re going to school, and also that health plans are not required to cover maternity care for dependents (your parents’ plan may or may not provide maternity coverage for dependents).
If there’s any chance that you might need maternity care, or if you’re concerned about the adequacy of your parents’ plan’s network in the area you’re going to school, you may want to consider getting your own plan instead. Regardless of whether you purchase a plan in the individual market – on-exchange or off-exchange – or enroll in the student health plan offered by your college, you’ll have maternity coverage and your plan will have a local provider network in the area where you purchase it (again with the caveat that if your college offers a self-insured student health plan, it might not be ACA-compliant and might not be considered minimum essential coverage; you’ll want to check with the school to see if the plan is ACA-compliant before making a decision about your coverage).
It’s also important to understand that the health plan will likely send the explanation of benefits (EOB) to your parents if you receive medical care as a dependent on their plan. Some states have taken action to protect dependents’ privacy regarding EOBs, but most have not. If this is a concern for you, a policy obtained in your own name might make you more comfortable.
Depending on how your parents’ plan is structured, taking you off the plan may or may not affect the amount that they pay in premiums. This will depend on whether they buy their own plan or have coverage via an employer (and if so, how the employer’s contributions to the premium are structured) and on whether they have other children who will remain on the plan.
If you’re in a state that has expanded Medicaid, you might qualify for Medicaid, depending on your income. If your parents claim you as a dependent on their tax returns, their income will be factored into your eligibility.
But if you file your own tax returns and your household income doesn’t exceed 138% of the federal poverty level ($18,754 for a single individual in the continental U.S. in 2022), consider Medicaid as an option if your state has expanded the eligibility guidelines as called for in the ACA.
Depending on the specifics of your situation, this option would also work even if your parents still claim you on their tax return, as long as the whole household’s income doesn’t exceed 138% of the poverty level, or if you can be considered a separate household for Medicaid eligibility purposes (which is possible even if you’re part of your parents’ tax household; note that the rules for this are not the same as the rules that apply to calculating premium tax credit eligibility, which is always based on the tax household).
Getting your own individual market plan (which is more affordable in 2021 and 2022, thanks to the American Rescue Plan)
You can also get your own plan in the exchange (or outside the exchange if you’re certain that you’re not eligible for premium subsidies). Moving to a new location – which includes moving to college – is a qualifying event that will allow you to purchase an individual market health insurance plan outside of the annual open enrollment period (as long as you already had coverage prior to the move).
Your eligibility for subsidies (premium tax credit) will depend on your household income and the cost of plans in your area. If your parents claim you on their tax return, your total household income will include their income (here’s more about how this works). If you file your own tax return, your subsidy eligibility will be based on your own income. (Note that household size is also part of the equation – if your parents’ income is counted, they’re also counted as members of the household when the household’s total income is compared with the federal poverty level guidelines.)
And through the end of 2022, the American Rescue Plan is making coverage for young adults more affordable than it normally is (these subsidy enhancements could be extended by Congress, but that had not yet happened as of the spring of 2022).
The Treasury Department clarified in 2013 that college and graduate students can qualify for subsidized insurance on an exchange even if they’re eligible for a student health plan offered by the university — as long as they don’t enroll in the university’s plan (this is in contrast with employees who are offered coverage by their employer and are thus, in most cases, not eligible for premium subsidies in the exchange, even if they choose not to enroll in the plan offered by their employer).
There’s no one-size-fits-all solution for college students. If you’re eligible for a subsidy in the exchange, it may be cost-effective to purchase an exchange plan instead of the student health plan from your university. Although depending on the size of your subsidy, you may find that the student health plan offered by your college still ends up being less expensive than the exchange plan, and might also have lower out-of-pocket costs.
For students who aren’t eligible for a subsidy (which is often the case if the student is still claimed as a dependent on their parents’ tax return, since the parents’ income is then counted for subsidy-eligibility purposes), the college’s health plan may very well be more affordable than a full-price individual market plan. And it may provide better coverage in the student’s local area than they would have if they relied solely on a parent’s health insurance plan.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.