Health Insurance Choices for College Students
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Click on the topics listed below if you wish to proceed to a specific subject for comparison: | ||
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Overview and Eligibility Medical Underwriting Access to Providers Dental/Vision Insurance Confidentiality |
Sole Source of Health Insurance Coverage for Pre-Existing Conditions Deductibles/Copay and SHS Integration Mental Health Coverage Pregnancy Coverage Dependent Coverage |
Catastrophic Coverage Portability Rx Drug Coverage Industry Standards Travel Abroad |
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by Stephen L. Beckley Last revised: May 20, 2009 (original publication: July 16, 2002) Although the need for effective student health insurance programs is increasing across the country, the majority of the nation's student health insurance/benefit programs do not comply with standards endorsed in July, 2008, by the American College Health Association (ACHA). There are numerous national media reports over the past nine years identifying common student health insurance program deficiencies. The lack of compliance with ACHA's standards is regrettable because effectively managed student health insurance/benefit programs can be an outstanding value, providing appropriate coverage at a cost well below rates charged for comparable individual health insurance coverage. Effectively managed student health insurance programs are also an increasingly superior benefit and cost value compared to many employer-sponsored health insurance programs which may cover students under parental or spousal health insurance.
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Resources Glossary of Insurance Terminology by the International Foundation of Employee Benefit Plans: http://www.ifebp.org/glossary/default.asp ACHA Insurance Standards: http://www.acha.org/info_resources/stu_health_ins.pdf http://www.hbc-slba.com/review.html The Health Insurance Resource Center http://www.healthinsurance.org/ United States Department of Education Office for Civil Rights: http://www.dol.gov/ebsa/pdf/cobra99.pdf Department of Labor: FAQ for Portability of Coverage Law (HIPAA): http://www.dol.gov/ebsa/faqs/faq_consumer_hipaa.html & http://www.dol.gov/ebsa/pdf/hippa.pdf Legal Assistance (attorneys specializing in health insurance law): www.forc.org Directory of Sate Insurance Departments: http://www.naic.org/state_web_map.htm ACHA position paper on compliance with the Civil Rights Restoration Act of 1987 National Consumers League: http://www.nclnet.org |
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Maintaining employer-sponsored health insurance under a parent's or spouse's insurance (or the student's own employment if he or she is enrolled in college on a part-time basis) is often the best coverage option. Employer-sponsored health insurance is available under parental insurance only if the student is a dependent, usually established by the parent(s)/guardian(s) taking a dependent deduction on their personal taxes. The most common problem for this group is how precariously they may be covered. For example, students who have declared themselves financially independent from their parents to maximize financial aid or to establish residency in a given state are usually not eligible to continue coverage through a parent’s employer-based plan. Students who get married, do not maintain full-time student status, or take a leave of absence from college also lose eligibility for most employer-sponsored health plans. Dependent eligibility audits by employers routinely find that college students covered under a parent’s insurance are actually ineligible for this coverage. A 2008 national survey conducted by Watson Wyatt Worldwide shows that the number of employers auditing for dependent eligibility will increase from 42 percent in 2007 to 74 percent in 2009. Many employer-sponsored plans require the student to maintain full-time student status during the academic year and have a maximum age limit for dependent children of 23 to 25 (many states have recently enacted legislation requiring fully-insured health plans to raise these maximum age limits). Be sure to check these provisions carefully, including provisions that might result in loss of coverage if the student gets married, does not return to his or her home address during periods away from college, and other dependent coverage requirements. Two other common problems with this coverage are (1) cost and (2) integration with college- or university- provided health centers or counseling centers. Each of these concerns is addressed in the remaining sections of this table. The cost factor, however, deserves special consideration. For more than a decade, employers have been aggressively shifting the cost of health insurance to employees. This cost shifting has occurred primarily through both disproportionate premium increases for dependent coverage and increasing deductibles and coinsurance. |
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If the college or university you attend does not require health insurance as a condition of enrollment, there is a high probability that one or more of the major concerns noted in this article for SHIBP coverage will apply. Without a requirement for health insurance, it is unlikely that a college or university can offer a viable group health insurance program that meets the standards of quality endorsed in this article. Be aware of the problems associated with voluntary health insurance! Of course, there are also large numbers of colleges and universities with health insurance requirements that provide inadequate programs/benefits. Ask your college or university if they comply with the standards for student health insurance/benefit programs endorsed by the American College Health Association (ACHA) |
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Many individual insurance programs include a residency requirement (e.g., you must be a resident of the state where you are attending school for six months before you qualify for a local Blue Cross and Blue Shield program). A comprehensive review about the availability, scope, and cost of individual insurance issues is available from Consumer Reports, The Kaiser Family Foundation, the Health Insurance Resource Center, and other independent health care advocacy organizations. If you are purchasing individual health insurance that is restricted to persons who are enrolled in college, make sure to check the credit hour requirements and other eligibility conditions before you purchase coverage.
Students should use caution in considering individual health insurance plans that do not provide prescription drug coverage, mental health care benefits, pregnancy coverage, or have deductibles that are more than the student can afford. |
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Not Applicable |
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One key element for evaluating a college- or university-sponsored health insurance/benefit program is the content of the endorsement from administrators and/or student leaders who are responsible for the program. The endorsement should affirm that students can rely on the program for their sole source of health insurance protection. More specifically, you should ask if this program is of sufficient quality that the managers would be comfortable having their own family members rely on it for their sole source of health insurance protection, and whether the college or university is making an affirmative declaration that the program complies fully with the standards for student health insurance/benefit programs endorsed by the American College Health Association Be highly cautious if you hear that the coverage is very good in relation to the amount students pay in premiums. This kind of statement is often associated with inadequate insurance programs. |
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Individual health insurance programs that are marketed exclusively to college students often have the problems associated with the adequacy of coverage noted in the discussion of SHIBPs. |
Student should have at least a $1 million lifetime maximum benefit, and catastrophic coverage should not be offered only as an optional benefit. The first objective for any health insurance program should be to provide catastrophic coverage. The primary reason you buy health insurance is to assure you have access to health care and financial protection under the worst possible circumstances. |
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Employer-sponsored plans usually provide at least a $1 million lifetime maximum. |
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Look elsewhere for coverage if the student program you are considering does not include appropriate catastrophic coverage (at least a $1 million lifetime maximum). Students should also make sure that there are no bizarre limitations or exclusions that limit the lifetime plan maximum (e.g., exclusion for organ transplants or low plan maximums for outpatient care). Another common problem is SHIBPs that proclaim high lifetime maximums, but limit reimbursements on a plan year or per condition basis (e.g., a plan with a $500,000 lifetime maximum and a $100,000 per year or per condition maximum). |
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Individual insurance provided by major insurance companies, HMOs, and managed care organizations will usually include a $1 million lifetime maximum. Coverage provided by association plans designed for college students often do not include appropriate catastrophic coverage. |
Medical underwriting is part of an application process that may result in the denial of eligibility for coverage or exclusion of benefits for a specific pre-existing illness or injury. |
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Medical underwriting is not a concern for students who are extending coverage under an existing employer-sponsored health plan. |
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Medical underwriting should not be a concern for student health insurance/benefit programs. These programs are precluded from denying access by the federal law known as Section 504 of the Rehabilitation Act of 1973. |
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Many individual insurance programs include medical underwriting provisions that could deny coverage entirely or limit coverage based on a pre-existing condition. COBRA is the extension of eligibility provision required under federal law for most employers who have 20 or more employees. If you have exhausted any COBRA eligibility, you may qualify for access to individual coverage or a state's uninsured persons risk pool, with waiver of the pre-existing condition exclusion, if you present a certificate of creditable coverage within 63 days of the loss of your previous group health insurance coverage under COBRA. If your coverage terminated under an employer who is not subject to COBRA (e.g., the employer has less than 20 employees), you may have immediate access to individual health insurance with no pre-existing condition exclusion. |
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Coverage for pre-existing conditions is not a concern if you are simply extending the coverage that is available from a parent's employer-sponsored insurance, through either an eligibility continuation provision beyond age 18 or 19 for full-time students or extension of eligibility under COBRA. |
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Depending upon how student insurance plans are regulated by the state in which the college or university is located, you may find it relatively easy to have any pre-existing condition exclusion eliminated by presenting a certificate of creditable coverage from an employer-sponsored health insurance program. Be aware that student health insurance programs in some locations are not regulated on the same basis as employer-sponsored health programs relative to pre-existing condition exclusion requirements. |
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Individual health insurance programs will commonly have a six month waiting period before pre-existing conditions are covered. The more reputable individual health insurance programs will have a relatively narrow definition of what constitutes a pre-existing condition. Individual health insurance plans that are designed solely for college students are also likely to have pre-existing condition exclusions. Use caution in evaluating the definition of what constitutes a pre-existing condition. Some of these plans have exceptionally broad definitions that may not require specific diagnosis and/or treatment of a condition during the lookback period for determining a pre-existing condition. |
Portability of coverage pertains to continuation of coverage if you need to take a semester/quarter off or the period you may need for coverage immediately following graduation. |
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Many employer plans discontinue coverage at the first of the month following graduation. In 2008, a new federal law was passed (P.L. 110-381) requiring employers, both with fully insured and self-funded plans, to continue providing coverage for college student dependents who would otherwise lose coverage because a medical condition required a reduction in class-load from full-time student status. This law is commonly referred to as Michelle's Law |
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Many SHIBPs allow you to take a semester or quarter off from college (particularly if you are participating in a college- or university- sponsored internship or cooperative learning experience program). Some programs allow you to maintain coverage for medical leaves of absence or other approved leaves of absence. Many SHIBPs also automatically include summer coverage in the spring semester coverage period. This is a great advantage for spring semester graduates. December graduates are often covered until the first day of the spring semester. |
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Portability of coverage is not a concern for most individual health insurance programs that are not contingent on you maintaining enrollment in college |
One of the key questions you should consider in making an insurance choice is whether you will have appropriate access to health care providers via a managed care network or preferred provider organization while you are at the college or university you attend. |
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The majority of employer-sponsored health insurance programs feature some form of managed care arrangement that provides the highest level of benefits if you obtain services from providers who have contracted with the employer's plan. If there are providers in the area of the college or university you are attending, employer-sponsored coverage may be an excellent option, even if the Student Health Service at your college is not a participating provider. This can be particularly true for employer-sponsored health plans that include a medical reimbursement account program that will cover medical expenses not otherwise reimbursable by the employer's health insurance program. Even so, students should be aware the limits for care from non-participating providers when care is received in the city where your college or university is located. For example, physical therapy services may not be provided for any out-of-network providers. One part of the benefits plan requiring special attention is mental health care services. While there may be adequate primary care physicians, specialists, and hospitals, the health care plan may not provide appropriate access for mental health care services. There is a continuing trend in many areas of the country for mental health care providers not to participate with health insurance plans. This is the case despite federal and state mental health care parity legislation. |
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A common important advantage of a college- or university-sponsored plans is the integration of the program to cover charges that you may incur at the Student Health Service. This is an increasingly important benefit because charges at many Student Health Services have risen significantly in the past decade. Another common advantage of SHIBP coverage is that Explanation of Benefit (EOB) forms will be mailed to the student's address as the primary insured (see Confidentiality section below). College or university sponsored plans are typically designed to provide access to participating providers while you are at the college or university. Consider whether the program includes providers while you are home or traveling, but do not reject the plan as a coverage option if there is a relatively low benefit reduction for using out-of-network providers (e.g., less than a 25 percent reduction in benefits). |
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Individual insurance programs have wide variability relative to access to health care providers. Individual insurance provided by Blue Cross and Blue Shield affiliates will often have the widest (nationwide) selection of providers. Group model HMOs like Kaiser may often have the lowest level of provider access, especially for non-emergency conditions. Many individual health insurance programs provided by second-tier insurance companies exclude mental health care services entirely. This should be a major concern for the college student population. |
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The analysis for deductibles, copayments, and coinsurance is the same for all three coverage options. Deductibles, copayments, and coinsurance are included in health insurance programs (1) to directly transfer some of the cost of the program to the individuals who obtain benefits; and (2) to discourage inappropriate usage of health care services. As noted above, a common advantage for SHIBPs is integration with Student Health Service and Counseling Center charges. Many SHIBPs have 100 percent coverage provisions for certain illnesses, injuries, or preventive services incurred at Student Health Services. Depending upon your financial resources, a higher deductible program may be a better value than a health insurance program with low deductible or copayment provisions and a higher premium. If you select a program with a high deductible (e.g., $500, $1,000, or higher), make sure you have access to adequate financial resources to pay for unexpected illnesses or injuries. You might also want to check with the financial aid office at your college or university to see how they respond to minor assistance requests for emergency medical expenses. |
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Many colleges and universities maintain counseling centers where students can obtain short-term therapy at either no cost or nominal visit copayments. If long-term services are needed (often defined as being more than six to 10 visits), most counseling centers will refer the student to a community mental health care provider. Because of increasing demand for services, counseling centers often develop waiting lists for non-emergency services. Appropriate insurance coverage is essential for mental health care services, including alcohol and other drug issues, because students often have conditions that require more than short-term therapy, and they need to have immediate access to services. | |
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In addition to problems associated with access to therapists because of managed care geographic limits and low provider reimbursement rates (in some areas of the country, many mental health care therapists are no longer willing to be participating providers for employer-sponsored insurance programs), a key problem associated with employer-sponsored coverage is a concern for having to submit claims to a parent's health insurance company. As noted under the Confidentiality section, Explanation of Benefit statements under employer-sponsored plans are generally sent to the primary insured (e.g., a parent) rather than the patient receiving services. A significant strength for employer-sponsored plans is that inpatient mental health care benefits (especially for bio-medically-based conditions) are much more likely to be provided at an adequate level. |
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A common advantage of SHIBP coverage is that mental health care benefits are often coordinated with the care provided by the on-campus counseling center. Concerns about confidentiality of care are greatly reduced under SHIBP coverage. Students who are concerned about the adequacy of the SHIBP coverage for mental health care should review the policy provisions for this coverage and contact the counseling center at their campus (or prospective campuses) to find out the organization's perception of the adequacy of the SHIBP. |
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Many individual health insurance programs provided by second-tier insurance companies exclude mental health care services. This should be a major concern for students who are considering this type of coverage. |
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Prescription drug coverage is usually a standard benefit for employer-sponsored health plans; however, there is wide variance as to whether the program includes first dollar coverage with low copayments versus prescription drug coverage that is subject to the plan's standard deductible. |
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As is the case with individual insurance programs, there is a wide variance among SHIBP programs for coverage of outpatient prescription drugs. Programs that exclude outpatient prescription drugs may be appropriate if there is sufficient subsidy for the cost of prescription drugs, especially psychotropic medications, from a Student Health Services pharmacy. SHIBPs that exclude or severely limit prescription drug coverage based on the availability of indigent care programs are both ethically and legally questionable. |
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Many individual insurance programs offer prescription drug coverage only with an optional coverage rider. Others exclude outpatient prescription drug entirely. |
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Many employer-sponsored benefit programs include dental insurance and vision insurance. The quality of the coverage varies widely. Generally speaking, dental care and vision care are not good candidates for insurance coverage because they represent expense components that are not likely to result in large catastrophic losses. Accordingly, adding the cost of insurance risk and administrative charges often only increases the cost of care. An increasingly popular option for employers is to offer discount programs for dental and vision care versus insurance coverage. |
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Dental care and vision care are probably the most over-valued benefits by both student consumers and parents making an insurance choice for their undergraduate students. SHIBPs that do not include this coverage should not be rejected, particularly if there is a net cost savings over alternative insurance options, and the SHIBP otherwise provides appropriate coverage. Generally, it is not likely that a SHIBP will provide either an effective dental insurance program or dental discount program unless the coverage is required as part of enrollment in the SHIBP. If the SHIBP you are considering offers an optional dental or vision programs, try to estimate the likelihood of you incurring dental or vision care expenses, add a projection for the amount of expense that is likely to be incurred, and then make a comparison to the premium charge. |
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There are numerous voluntary dental and vision programs available to the general public. As is the case for voluntary dental programs under SHIBP coverage, the value of most of these programs is often questionable. |
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Employer-sponsored health plans are required to provide pregnancy benefits on the same basis as any other temporary disability, pursuant to the Pregnancy Discrimination Act of 1978. There is, however, one important exception. Employer-sponsored health plans cannot have any pre-existing condition exclusion, regardless of previous coverage, pursuant to the requirements of the Health Insurance Portability and Accountability Act of 1996 (HIPAA). |
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SHIBPs are required to provide pregnancy benefits on the same basis as any other temporary disability subject to Title IX of the Education Amendments of 1972 and the Civil Rights Restoration Act of 1987. This requirement applies to both student and spouse coverage. In states where SHIBPs are regulated under HIPAA on the same basis as employer-sponsored health plans, there can be no pre-existing condition exclusion for pregnancy, regardless of whether the student had any previous health insurance coverage before enrolling in the SHIBP. |
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In many states, there is no requirement for individual health insurance coverage to include any pregnancy benefits. This coverage is often added as optional coverage rider, but it is usually expensive. Individual health insurance programs that are marketed to college students are not required to provide pregnancy benefits. The Title IX mandates noted for SHIBP coverage apply only to colleges and universities. |
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For the majority of employer-sponsored group health insurance plans, the definition of covered expenses and exclusions do not vary greatly. Under most employer-sponsored health plans, you can be relatively certain that there will not be any major surprises for the coverage provided. Consumers should, of course, review the schedule of coverage and exclusions for any policy. |
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There is wide variance among SHIBPs relative to providing coverage with industry standard exclusions and covered expenses. SHIBPs should not have exclusions for mental health conditions, illegal use of drugs or alcohol, or perceived high risk behaviors such as hang gliding or operation of a motorcycle or three-wheeled vehicle. Students should also look carefully at the definition of "covered expenses" and/or "eligible service." Many SHIBPs include limitations in these provisions that are atypical for employer-sponsored group health insurance coverage. |
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Individual health insurance programs offered by major insurance companies and managed care organizations will generally have covered expense provisions and exclusions that are consistent with the provisions in employer-sponsored health plans. A common exception to this statement is for organ transplant coverage. Individual health insurance programs marketed to college students often include exclusions and covered expense provisions that are atypical for the group health insurance field. Refer to the discussion under SHIBP coverage for specific concerns. |
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A major concern that often arises under employer-sponsored health programs is that the Explanation of Benefit (EOB) form provided to covered persons following administration of a claim is generally sent to the primary insured rather than to the patient. Some insurance organizations have started allowing dependents who have reached the age of majority to designate that EOB forms be sent to their current home address. Although EOB forms usually do not include specific diagnosis or procedure information, they do commonly identify the name and location of the health care provider, date of treatment, the amount of the expense incurred, and the amount of plan benefits or explanation of claim declination. Many college students are uncomfortable having EOB forms go to parents, and, there may be no way to request that the EOB form not go the primary insured. This concern is growing as the number of college health services with significant fee-for-service charges is increasing. |
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If the SHIBP you are considering is integrated with Student Health Services charges, you will have a high level of confidentiality relative to the concerns about family members or others being able to access claims information. Neither the Student Health Service nor the claims administrator for the SHIBP will be able to discuss your health care or insurance claim without your permission (certain exceptions exist for emergency situations and release of medical information mandated by law). |
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Individual insurance also provides a high level of confidentiality relative to the concerns noted under employer-sponsored health coverage for the distribution of EOB forms. |
If you plan on traveling abroad, make sure to look into medical evacuation and repatriation coverage. If your health insurance does not include this coverage, you should purchase additional travel insurance to provide these important benefits. A Web search using the term "International Travel Insurance" should lead you to numerous companies providing this coverage. Carefully examine the scope of coverage and limitations. |
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Unless you are fortunate enough to have coverage through a major corporation, there is a fairly low probability of employer-sponsored health insurance providing coverage for emergency medical evacuation or repatriation coverage. You should also check into whether your employer-sponsored health plan will cover medical expenses incurred outside of the United States. |
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Most SHIBPs provide world-wide coverage for health care expenses. This coverage, however, may not be sufficient to make sure that you have all of your insurance needs met. You should see if your SHIBP provides medical evacuation and repatriation coverage while traveling abroad. If you are traveling as part of a college- or university-sponsored program, this coverage may be provided for you as part of the academic program that is sponsoring the travel. Generally speaking, you should have at least $200,000 for medical emergency travel coverage and $10,000 in coverage for transportation of remains if you die while abroad. As is the case with the health benefits provided by a SHIBP, college- or university-sponsored travel abroad programs should not include exclusions for mental health conditions, illegal use of drugs or alcohol, or perceived high risk behaviors such as hang gliding. |
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Individual health insurance programs, except certain special programs designed for college students, usually do not include emergency medical evacuation and repatriation coverage. |
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Employer-sponsored plans will not include provisions that will allow a dependent to cover a spouse or child. Most employer sponsored plans will terminate dependent coverage if you get married, even though you remain a full-time student. |
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There is a high degree of variability among SHIBPs for the cost and adequacy of coverage for health insurance for dependents. Many SHIBPs have an operating policy that is designed to have a nominal cost subsidy for dependent coverage from single students or general college/university funds. A frequent advantage of SHIBP coverage is access to the Student Health Service or Counseling Center for spouses. A small number of Student Health Services may provide limited services for children. Even with costs that are high, SHIBP coverage may still be less costly than many individual health insurance alternatives. Most SHIBP programs do not offer high deductible options that could lower the cost of dependent coverage. |
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The main advantage of individual health insurance for dependent coverage is the ability to select a high deductible option to obtain the best premium value. The main disadvantages for individual health insurance are the concerns noted above for scope of coverage, access to providers, and integration with Student Health Services coverage. |
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Obtaining appropriate health insurance is important for college students, even though many students perceive that they have a low likelihood of needing major health care services while they are enrolled in college. The risks associated with going uninsured are significant, and the need for catastrophic illness/injury coverage is essential for the college-age student population. Nothing in this article should be construed to be legal advice or legal opinion from Hodgkins Beckley Consulting, LLC, or Stephen L. Beckley & Associates, Inc. |
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