In February, the Health and Human Services Department issued proposed regulations addressing the impact of health care reform on student health insurance coverage. The proposed regulations classify student health insurance coverage as a type of "individual health insurance coverage."
As such, student health insurance plans will be subject to several of the most significant provisions under the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010.
According to the preamble of the proposed regulations, the Government Accountability Office has estimated that most students enrolled in U.S. colleges and universities have health coverage through employer-sponsored group health plans. According to the GAO, in 2006, approximately 7% of students between the ages of 18 and 23 - approximately 610,000 individuals - were covered through other private health insurance, such as student health insurance. The health care industry, however, has estimated the number of individuals with student health insurance coverage to be significantly higher, at 1.1 million to 1.5 million individuals. According to industry sources, 1,500 to 2,000 institutions of higher education offer student health coverage, and the vast majority of such coverage is fully insured.
The proposed regulations define "student health insurance coverage" as a type of individual health insurance coverage provided pursuant to a written agreement between an institution of higher education and a health insurance issuer (e.g., a master insurance policy between the college or university and an insurer), which is provided to students who are enrolled in that institution and their dependents. The proposed regulations do not apply to self-funded student health plans.
The proposed regulations require that student health insurance coverage be available only to students enrolled at the institution of higher education and their dependents. Such coverage is required to satisfy any additional requirements that may be imposed under state law. In addition, eligibility for student health insurance coverage cannot be conditioned on any health status-related factor (e.g., medical condition - including both physical and mental illnesses - claims experience, receipt of health care, medical history, genetic information, evidence of insurability or disability).
Because student health insurance coverage is considered a type of individual health insurance coverage under the proposed regulations, most of the significant provisions of health care reform will be applicable to such coverage. For instance, student health insurance plans, like employer-sponsored group health plans, are not permitted to rescind a participant's coverage except in the case of fraud or intentional misrepresentation of a material fact.
In addition, student health insurance plans are required to cover preventative services without participant cost-sharing requirements, and are required to extend health coverage to dependents up to age 26. Student health insurance plans are also prohibited from imposing pre-existing condition exclusions on enrollees who are under age 19, and are subject to the new claims and appeals procedures under health care reform.
Student health insurance plans are subject to a special transition period under the proposed regulations with regard to health care reform's annual limit rules. Specifically, under the proposed regulations, for policy years beginning on or after Jan. 1, 2012, but before Sept. 23, 2012, a student health insurance plan may not impose an annual dollar limit on "essential health benefits" (e.g., emergency services, maternity and newborn care, and pediatric services) that is lower than $100,000. (This is significantly lower than the $1.25 million threshold applicable to employer-sponsored group health plans.) For policy years beginning on or after Sept. 23, 2012, but before Jan. 1, 2014, a student health insurance plan may not impose an annual dollar limit on essential health benefits that is lower than $2 million.
According to the proposed regulations, student health insurance coverage is exempt from the guaranteed availability and guaranteed renewability requirements under health care reform. That is, student health insurance plans are not required to offer coverage to certain eligible individuals, nor are such plans required to permit individuals to renew or continue their coverage from year to year.
The proposed regulations require health insurance issuers providing student health insurance coverage to include a statement in written plan materials notifying students that the policy may not meet all of the requirements under health care reform. HHS provides model language for this notice in the proposed regulations.
As a reminder, effective for plan years beginning on or after Sept. 23, 2010, group health plans and insurers are required to extend dependent health coverage to adult children up to age 26. Therefore, many college and university students will likely remain covered under their parents' health plans, rather than purchase their own student health insurance coverage.
The proposed regulations are intended to ensure that students who buy insurance through their college or university will be given many of the same rights and protections as other Americans under health care reform.
The proposed regulations are effective for policy years beginning on or after Jan. 1, 2012. Therefore, if a student health insurance policy renews on August 1 of each year, the proposed regulations would become applicable to such policy on Aug. 1, 2012.
Contributing Editor Kate Bongiovanni is an associate in the tax section of Smith, Gambrell & Russell, LLP. She practices in employee benefits law, with a specific concentration in health and welfare matters, including compliance with health care reform legislation, ERISA, HIPAA, FMLA and COBRA. She can be reached at
