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HHS recently issued a  final regulation on student health care coverage offered by colleges and universities.  The regulation defines “student health insurance coverage” as a type of individual health insurance coverage provided by an institution of higher education to its students and their dependents. The regulation does not apply to coverage provided to high school or other secondary school students.  In addition, the regulation only applies to insured student health plans; it does not apply to self-funded plans.

Here’s what you need to know about how health care reform affects student health plans:

1.   Minimum Annual Benefit Limits 

The following special minimum annual benefit limits apply to student health plans:

  • $100,000 for policy years beginning on or after July 1, 2012 but before September 23, 2012;
  • $500,000 for policy years beginning on or after September 23, 2012, but before January 1, 2014; and
  • No annual dollar limits are permitted for policy years beginning on or after January 1, 2014.

Students obtaining a student health plan this summer or fall may be subject to the $100,000 annual benefit limit.  If a student obtains a student health plan for the second semester and the plan’s policy year starts on or after September 23, 2012, the minimum annual benefit limit increases to $500,000.  The annual limit will disappear for policy years beginning on or after January 1, 2014.  These minimum annual limits are substantially greater than benefit limits in most contemporary student policies.  As a result, students who purchase the coverage will see the cost of that coverage increase, in some cases substantially.

In contrast, most other (i.e., non-student) health insurance policies must have a minimum annual benefit of $1.25 million for plan years beginning on or after September 23, 2011 and a $2 million minimum annual benefit for plan years beginning on or after September 23, 2012 but before January 1, 2014.  Because the annual limits applicable to student health plans are significantly lower that the annual limits applicable to other health plans, students who have coverage available under the group health plan of a parent’s employer or under a parent’s individual health insurance policy may wish to utilize that coverage.  

2.   Termination of Coverage Upon Ceasing to be a Student

Under the regulation, student health plans have discretion to allow temporary continuations of coverage upon the loss of student status.  For example, a 90-day extension may be offered, to allow a graduating student to transition to other coverage.  Be sure to check your student’s policy to determine when his or her student health coverage ends.

3.   Student Administrative Health Fees

A student administrative health fee is a fee charged by the school on a periodic basis to its students to offset the cost of providing health care through health clinics regardless of whether the students use the health clinics or have student health insurance coverage.  The health insurance coverage may coordinate with student health clinics to provide preventive services; the insurer can arrange for the student health center to serve as its in-network provider where students can receive preventive services without cost-sharing.   

4.   Contraceptive Coverage

Certain colleges and universities may have religious objections to providing contraceptive benefits in a student health insurance policy.  If so, they may be able to take advantage of the temporary one-year period where the requirement to provide contraceptive benefits is not enforced.  In that case, the college or university will not have to provide contraceptive benefits as part of its student health insurance plan until policy years beginning on or after August 1, 2013.

5.   Notice

A health insurer that provides student health insurance coverage and does not meet the minimum annual benefit limit set under the Affordable Care Act for non-student plans must provide a notice informing students that the policy does not meet the minimum annual benefit requirement.  The notice must include the dollar amount of the minimum annual benefit limit along with a description of the plan benefits to which the limit applies, and other information. 

The insurer is no longer required to provide the notice when the policy limit no longer applies for policy years beginning after January 1, 2014.