An HHS announcement on Wednesday February 9, 2011 outlined changes to the way that colleges may have to provide health coverage to their students in the future. The proposed regulation would bring student health insurance in line with provisions outlined by the Affordable Care Act until state exchanges are established in 2014. How will this affect student plans?
College Health Insurance Plans to be Regulated by the Affordable Care Act
Student health coverage was not originally affected by the Affordable Care Act in the same way as other types of insurance. The plans offered here were classified as "limited benefits" which allowed them to slip through much of the regulation under the Act. They may now be treated as "individual health insurance coverage". This change could see significant improvements to the protection offered to students, but could come with some downsides.
How Will Student Health Plans Change?
Students who need to enrol in college plans are often given limited coverage and unregulated benefits options. A plan may, for example, set low benefit caps and offer restricted health care choices. Currently, a student may not be able to fund all the treatment they need or may be denied treatment because of pre-existing conditions or coverage exclusions. Under the Affordable Care Act, student health insurance would have to offer better protection.
This could see a range of changes to plans. So, for example, insurance providers would not be able to set lifetime dollar limits or benefit ceilings. They would not be able to end coverage for a sick student if they discover an "unintentional error" on an application and they would no longer be able to use a pre-existing condition as a reason to deny coverage (under age 19). It is also likely that free preventative care will need to be added to college plans.
These proposed changes may be phased in over time. Plans for policy years that began before September 23, 2012 would be required to offer at least $100,000 in annual dollar limits. For years after that date, they must all meet the annual limit restrictions dictated by the Affordable Care Act.
The Advantages and Disadvantages of Adding Student Health Insurance to the Affordable Care Act
This proposed change would add standardization and consistent regulation to college health plans and the guarantees of coverage would be more beneficial to many students. According to Secretary Kathleen Sebelius: "This rule would ensure that these plans remain a viable, affordable option for students while guaranteeing that they are regulated consistently and offer transparent benefits.”
This coverage is often designed to simply offer basic low cost care and there is a concern that this proposal might make it more difficult for colleges to offer plans. Extending its reach may also cause cost problems. Insurance companies could potentially increase premiums for some student health insurance plans in the future to compensate for the additional services that would need to be offered.
Sources: U.S. Department of Health and Human Services (HHS Press Office, "New Rule Ensures Students Get Health Insurance Protections of the Affordable Care Act", 2/9/11); Wall Street Journal (Jessica Silver-Greenberg, "College Plans Required to Comply With Health-Care Law", WSJ 2/9/11) . Accessed online February 10, 2011.
Carol Finch - Carol Finch is the Topic Editor for Retirement Planning, Budgeting, E-Commerce & Technical/Business Writing on Suite101.
