HBC-SLBA Healthcare Management and Benefit Consultants Specializing in Higher Education

Frequently Asked Questions

How do we go about working toward mandatory health insurance (as required by Standard I), and what does "fiduciary responsibility" really mean as used in Standard III? (submitted by a director of a student health service)

The factors that are commonly associated with successful adoption of an institutional requirement for health insurance are provided at HBC-SLBA's website. The best place to begin a process for mandatory health insurance is to develop extensive data about any existing uninsured student population and the impact that lack of health insurance has on students, the college or university, and local health care providers/governmental agencies. In short, there has to be a compelling rationale to adopt an institutional requirement for health insurance (although a poor quality or failing voluntary insurance program can be an important subsidiary reason)

Standard III states that "The college or university acknowledges it has a fiduciary responsibility to manage student health insurance/benefits programs in the best interests of students covered by the programs." This may be one of the most important provision in ACHA's standards. Numerous examples of the application of Standard III are provided in HBC-SLBA's companion article, but the overreaching concept is that the program must be managed under a "prudent expert" rule and be operated for the sole benefit of the students participating in the program. The prudent expert standard is derived from the fiduciary responsibility provision in the Employee Retirement Income Security Act of 1974 (ERISA). This simply means that the program must be managed with appropriate expertise rather than simply applying sound judgment under a reasonable person standard. For example, no t utilizing the most effective funding system for the program could be a failing of program managers to act in the best interest of the covered student population.

Managing the student health insurance/benefit program in the best interests of student consumers means that institutional interests (including the interests of a university hospital, university physicians group, student health service or counseling center, or any external entities) are subsidiary to the best operation of the program for covered students. This is the same concept that applies to employer-sponsored group health insurance programs governed by the Employee Retirement Income Security Act of 1974. While it is a high standard, it is common for the majority of large group health insurance programs in the United State and is a reasonable expectation for the operation of student health insurance/benefit programs. If this standard cannot be complied with (e.g., the college or university is sole sourcing its managed care network to an affiliated university hospital/university physician group), then there should be full disclosure in program marketing material explaining. This is important from a risk management perspective, regardless of the existence of ACHA's standards. Students and parents assume the college or university has no financial interest in the operation of a student health insurance/benefit program.

Nothing in this FAQ response from HBC-SLBA should be construed to be legal advice or legal opinion. Legal questions should be reviewed by the legal counsel for the college or university submitting the inquiry.

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