Student Health Plans and the Affordable Care Act

Over a million students are covered through student health plans offered by colleges, universities, or other institutions of higher education.  However, not all student health plans are the same.  Some plans are comprehensive but others offer limited benefits, which can put students and their families at risk for catastrophic medical bills.  In addition, these plans are currently regulated by a patchwork system that makes it difficult for students and their families to understand what their plans cover and their rights as consumers.

In February 2011, the Department of Health and Human Services (HHS) issued a proposed regulation to ensure students enrolled in these plans benefit from important consumer protections in the Affordable Care Act.

In the proposed rule, HHS requested comment on how selected Affordable Care Act requirements should apply to student health insurance coverage.  We received approximately one hundred comments in response to the proposed rule.

Today, HHS is issuing a final student health coverage rule to ensure that students have access to coverage and benefit from the Affordable Care Act’s Patient’s Bill of Rights, preventive services coverage, and other consumer protections.  The final rule extends all of the protections provided to enrollees in individual market plans with several adjustments in light of the unique nature of these plans:

• Annual limits.  The proposed rule included a phase in period for compliance with restricted annual limits.  To ensure the continued availability of coverage for students, the final rule modifies the phase in schedule so that student health plans cannot have annual limits of less than $100,000 on essential health benefits for policy years beginning on or after July 1, 2012 but before September 23, 2012, and $500,000 for policy years beginning on or after September 23, 2012, but before January 1, 2014.  For policy years beginning on or after January 1, 2014, annual limits on essential benefits are prohibited.
• Medical Loss Ratio (MLR).  To ensure that students receive value for their premium dollar, this final rule makes student health plans subject to the reporting and rebate requirements of the medical loss ratio rule starting in 2013.  The Affordable Care Act stipulates that the reporting requirements and methodologies for calculating the medical loss ratio “be designed to take into account the special circumstances of small plans, different types of plans, and new plans.”  To address the special circumstances of Student Health Plans, HHS will apply a methodological adjustment to the way the medical loss ratio is calculated for those plans. Similar to mini-med and expatriate plans, the adjustment will address the unusual expense and premium structures of student health plans.  These changes to the methodology for reporting and rebates apply only in calendar year 2013, after which time no adjustment is provided.
  In addition, we added to the MLR rule a provision that requires student coverage to be aggregated nationally as its own pool rather than on a State by State basis, and to report experience separate from other policies. 
• Notice Requirement.  The regulation requires a health insurance issuer to disclose to the student in the insurance policy and other plan materials that the policy being issued does not meet the minimum annual limits requirements.  Students must also be notified that they may be eligible for health coverage as a dependent under their parents’ employer plan or individual market coverage if they are under the age of 26.  The regulation contains model language to satisfy this requirement, using terms easily understood by students and their dependents.  HHS will require insurers that sell student health plans to provide this notice prominently in order to improve transparency and ensure consumers are aware of the product they are purchasing.  The notice requirement sunsets in 2014 when annual limits are prohibited. 

The final rule, like the proposed rule, notes that self-funded student health plans cannot be included in this regulation without a change in law.  Additionally, the final rule clarifies that the student health plans of non-profit religious institutions of higher education qualify for a one-year transition from the new contraceptive coverage requirement, similar to non-profit employers.

The Affordable Care Act gives all Americans greater freedom and control over their health care decisions through new benefits and consumer protections.  The final rule released today makes clear that students who purchase health insurance through their college or university will also benefit from the new consumer protections in the law.

Read the final rule on Student Health Insurance Coverage here: https://www.regulations.gov/#!documentDetail;D=CMS-2011-0016-0108

Posted on: March 16, 2012

Last updated: April 5, 2012