Improving Health Insurance Protections for Students

Status of Student Health Insurance Coverage with Policy Years Starting Prior to January 1, 2012

Q: On February 11, 2011, the Department of Health and Human Services (HHS) published a Notice of Proposed Rulemaking in the Federal Register relating to Student Health Insurance Coverage.  The proposed regulation clarifies the circumstances under which health insurance sold to students enrolled in colleges and universities is considered a type of individual health insurance coverage.  It also provides that certain Public Health Service (PHS) Act requirements would be inapplicable to such coverage.  The proposed policy set forth in the proposed rule would be applicable to policy years beginning on or after January 1, 2012.  What is the status of student health insurance coverage with policy years starting prior to January 1, 2012?

A: The proposed regulation clarifies the circumstances under which health insurance sold to students  is considered individual health insurance coverage, as opposed to short-term limited duration insurance under 45 C.F.R. § 144.103.  Insurance coverage that meets the definition of short-term limited duration insurance under 45 C.F.R. § 144.103 is not subject to PHS Act requirements.  With respect to student policies that are individual health insurance coverage, HHS will not consider PHS Act requirements to apply to such coverage for policy years that begin before the first policy year to which the final regulation will be applicable.  In addition, issuers that had a reasonable belief that the insurance coverage that they were providing to colleges and universities met the definition of short-term limited duration insurance will not, for purposes of federal law, be considered to be out of compliance pending the start of the first policy year to which the final regulation will be applicable.  Starting with the first policy year to which the final regulation will be applicable, any student health insurance coverage (that is, any insurance sold to students that does not meet the definition of short-term limited duration insurance set forth in 45 C.F.R. §144.103) will be subject to all requirements that will apply to student health insurance coverage under the final regulation.

States currently enforce the individual market requirements of title XXVII of the PHS Act.  HHS wishes to avoid disruption in the student health insurance market during the period before the applicability of the final rule.  Therefore, HHS is also clarifying that, during this period, if a State is otherwise substantially enforcing the individual market requirements but the State does not enforce those requirements with respect to student health insurance coverage (as it would be defined by the proposed rule), the State is nevertheless considered to be substantially enforcing the individual market requirements.  The federal enforcement policy described above does not preclude States from imposing State law requirements on student health insurance coverage for policy years beginning before the final regulation’s effective date.  In other words, States can continue to enforce relevant provisions relating to student health insurance coverage under State law and are not required to roll back any State law protections already applicable to student health insurance coverage.