By Lisa Zamosky
Many parents buy their son or daughter a college health plan, believing they’ve adequately protected their child from major medical expenses should they fall ill or have an accident while away at school. Yet, historically, college health plans have been far less regulated than other insurance products, leaving many people to pay for insurance that provides poor coverage. That’s all about to change.
Last week, the Department of Health and Human Services made an announcement about its regulations for state and college health plans, which cover about three million college students throughout the country. As a result of the Affordable Care Act (a.k.a. health reform), these plans will now be required to provide the same consumer protections as other insurance products sold to employers and individuals.
Here, five significant changes college students will see over the next few years – some as they head back to school this fall.
1. Annual and lifetime limits lifted: According to Young Invincibles, a Washington DC-based nonprofit group that advocates for young adults, many college health plans have a very low annual benefit allowance, with some as low as $1,500. Beginning with the 2012/2013 school year, annual limits must be raised to at least $100,000 and to $500,000 for the 2013/2014 school year. By 2014, both annual and lifetime limits will be completely phased out.
2. Better value: By 2013, college health plans will be required to spend 70% of the insurance premiums they collect on medical care, as opposed to administrative costs or profits, and 80% thereafter. Today, some get away with spending as little as 35% on medical care.
According to Aaron Smith, executive director of Young Invincibles, this is one of the most important and least understood benefits gained. “If you pay $1,000 a year for your insurance, but the insurer on average only pays out $400 in care, the insurer will actually have to mail you a check for $300 to make up the difference,” he says. “It’s the first time students have been guaranteed decent value on their student health insurance, and it actually will help to prevent price increases,” he says.
3. Free preventive care: As students head back to school this fall, they’ll be able to access preventive care such as screenings, vaccinations and well visits free of charge, with no co-pays or deductibles.
4. Birth control covered: Under the final rule, colleges and universities will be required to make birth control available to students and pick up its full cost. Those with religious affiliations are allowed to take advantage of a 1-year waiting period during which they would be exempt from this requirement. Following that, these schools must provide this benefit. However, the insurance company, not the school, would be required to cover the cost.
5. Guaranteed coverage: Approximately 15% of young adults have a chronic health condition. Countless more may have received medical care which would disqualify them from gaining access to coverage. As with all health plans, starting in 2014, insurers providing college health plans will no longer be able to deny students coverage on the basis of a pre-existing medical condition.
Are you a college student or a parent of one? If so, I’d love to hear about your experiences with student health plans. Have they provided reasonable coverage or left you holding the bag when medical issues arose?