A final rule issued late last Friday offers a little bit of breathing room for student health insurance plans. But while it offers a grace period to comply with reform law provisions, coverage costs are likely to increase substantially. And that could cause some schools to stop offering health coverage. If that occurs once the new rules become effective, students now covered by a low-cost, bare-bones student policy will need to get coverage through a parent’s health plan, buy expensive individual coverage or go without insurance.
The final rule allows student health plans to phase in the elimination of lifetime and annual limits and eliminate them completely by Jan. 1, 2014. An interim rule, released in early 2011, would have required student plans to have an annual limit of $2 million. The new lower limit was prompted by comments made to HHS looking for a phase-in period before being required to eliminate annual limits. Complying with that provision could translate into large premium increases. For example, a policy that costs $1,600 a year, covers up to $5,000 a year in pharmacy and has a $300,000 annual limit could see premiums increase by 5% to 10%. But a policy that limits coverage to just $50,000 a year could see premiums soar by as much as 50% as it boosts the annual limit to $500,000, incorporates essential health benefits and adds first-dollar coverage for preventive drugs, according to a broker who sells student policies.
About 1 million people are covered through student health insurance offered by colleges, universities or other institutions of higher education. Aetna Inc., which covers about 500,000 students, is the largest seller of student coverage, followed by UnitedHealth Group with about 300,000. Read the final rule at http://cciio.cms.gov/resources/regulations/index.html#shp.
If students opt to go without health coverage, how will that impact the overall insurance risk pool?