Saturday, December 28, 2013

The ACA is killing off a college plague: junk student insurance

One type of junk health insurance that the ACA is doing away with is the kind of crappy policy that many colleges used to push on their students. (There is one loophole extended to Jan. 1, 2015, explained below.)  BusinessWeek exposed this scam in 2008:
More than half of the insurance plans recommended by colleges offer benefits of $30,000 or less, according to a survey published in March by the General Accounting Office, an arm of Congress. Many plans have further limits that prevent payout of even modest maximums. While two-thirds of the country's more than 17 million college students have coverage from a parent's employer or their own job, many of the rest may be vulnerable if they suffer a serious illness or accident. With premiums and restrictions increasing under employer-provided plans, a growing number of parents are shifting children to college-sponsored coverage. But "when a student gets gravely sick, $30,000 in benefits is unrealistically low," says Alan Sager, a professor at Boston University's School of Public Health.
Indeed. BusinessWeek reporters Ben Elgin and Jessica Silver-Greenberg spotlighted a 19 year-old college kid who came down with a rare nervous system disease, for which the college plan, offered by UnitedHealthcare, reimbursed just $22,800 of the $206,325 bill for 19 days of intensive care (ultimately leaving the family on the hook for $265,000 in hospital and doctor bills).

The ACA banned lifetime coverage caps upon passage and phased out annual caps. This year, colleges were allowed to cap coverage at $500,000 for a year; as of January 1, annual caps are illegal. 

College health insurance plans are exempt from certain ACA requirements  -- for example, they don't have to guarantee coverage to plan members who lose their student status, and insurers are allowed to maintain a separate risk pool for college plan members, rather than including them in the general individual market risk pool.  But as of January 1, 2014, student health insurance plans must cover all essential health benefits mandated by the ACA, including free preventive (e.g., contraceptive) services. (See the American College Health Association Q&A - thanks, Sy Muckherjee).

The loophole concerns self-funded student health plans, which are not subject to ACA regulation. As of now, and until Jan. 1, 2015, such plans are simply designated "minimal essential coverage" -- that is, they can continue as is and satisfy the individual mandate for students.  As of Jan. 1, 2015, however, self-funded student health plans must apply to HHS to be recognized as minimum essential coverage -- and meet ACA standards:
 in order for the Secretary to recognize coverage as minimum  essential coverage under 45 C.F.R. § 156.604, the Secretary must determine that the coverage meets substantially all the requirements of Title I of the Affordable Care Act that apply to non-grandfathered plans in the individual market (CMS Bulletin, Oct. 31, 2013, p. 3).
I do not know what percentage of colleges offer students self-funded plans, or how inadequate those plans may be.  HHS, reviewing comments to its proposed rule in the issuance of its Final Rule with regard to "miscellaneous minimum essential coverage provisions" (7/1/2013), indicates that inadequate plans exist but are in process of being phased out:
Many commenters were concerned that the unregulated status of self-funded student health coverage may leave students unable to benefit from the protections of the Affordable Care Act, and that students who are offered a self-funded plan through their college or university may find it difficult or impossible to obtain coverage through the Exchanges and to access the Affordable Care Act premium and cost-sharing subsidies. These commenters conceded that some self-funded student health coverage is good coverage, but other plans do not provide adequate coverage. These commenters specifically cited annual and lifetime limits, prescription drug limits, pre-existing condition exclusions and rescissions as reasons that some self-funded student health coverage is not satisfactory coverage for many students. In contrast, other commenters stated their support for designating self-funded student health coverage asminimum essential coverage, citing the ACHA guidelines document,Standards for Student Health  Insurance/Benefits Programs, which will “encourage provision of benefits in self-funded plans that are consistent with Affordable Care Act requirements that have been established for student insured plans” (pp. 80-81).
 So it's buyer beware, to a limited extent, for one more year. But junk student insurance is on the way out.

UPDATE: Grad student health wonk (and TIE blogger) Adrianna McIntyre points out that for many students, the ACA will offer a better deal, either through the exchanges or the Medicaid expansion (though if the student is claimed as a dependent, it's the parents' income that determines eligibility). Adrianna points to an invaluable Kaiser Family Foundation FAQ confirming this:
Eligibility for a student health plan does not make you ineligible for Marketplace coverage and subsidies. Even if you are eligible for student health coverage, you can get coverage through the Marketplace. In addition, if your income is between 100% and 400% of the federal poverty level  and you meet other requirements, you can qualify for premium tax credits; if you income is between 100% and 250% of the federal poverty level, you can also qualify for cost sharing reductions.

In addition, eligibility for a student health plan does not make you ineligible for Medicaid. Check with your state Marketplace to find out if you meet the income and other eligibility standards to enroll in Medicaid coverage. 
 According to the BusinessWeek article, two thirds of college students have health insurance either through their parents or an employer (that's as of May 2008).  Many if not most of those who lack such insurance may be eligible either for heavily subsidized insurance on the exchanges or for Medicaid.  Perhaps college-sponsored student health plans are en route to becoming a relic. The BusinessWeek article also reported that 30% of colleges required students to buy the school-sponsored plans.  I hope that's not still the case.

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