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: October 10, 2003 (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 health insurance programs for college students do not yet comply with standards endorsed in July, 2000, by the American College Health Association (ACHA), and many programs do not provide adequate coverage for students to use as their sole source of health insurance protection (source: US News & World Report, "Healthcare Headaches," April 15, 2002). This is regrettable because effectively managed student health insurance 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 International Foundation of Employee Benefit Plans: http://www.ifebp.org/glossary/default.asp Health Insurance Association of America: http://www.hiaa.org/consumer/glossary.cfm ACHA Insurance Standards: http://www.acha.org/info_resources/stu_health_ins.pdf General Consumer Information from the Health Insurance Association of America: http://www.hiaa.org/consumer/guidehi.cfm 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/1regulator/usamap.htm ACHA position paper on compliance with the Civil Rights Restoration Act of 1987 United States Department of Education Office for Civil Rights: http://www.ed.gov/offices/OCR/ 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. The problems with this coverage are generally three-fold: (1) cost; (2) access to health care providers for non-emergency care if the student is enrolled in a college that is not within a managed care organization's service area; and (3) 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. Employers have been aggressively shifting the cost of health insurance to employees for more than a decade. This cost shifting has occurred primarily through both disproportionate premium increases for dependent coverage and increasing deductibles and coinsurance. In regard to the latter form of cost shifting, the Boston Globe reported on August 9, 2002, ("High Deductible HMO Plans Pushed -- Expense to Climb for Many Workers") that many employers in Massachusetts are significantly increasing both copayments under HMO plans and deductibles under major medical coverage, sometimes in excess of $5,000. Employer-sponsored health insurance is only available under parental insurance if the student is a dependent (for tax purposes) of his parent/guardian. Many employer-sponsored plans also 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. Be sure to check these provisions carefully, including provisions that might result in loss of coverage if the student gets married. |
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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 SHIP coverage will apply. Without a requirement for health insurance, it is unlikely for a college or university to offer a viable group health insurance program that meets the standards of quality endorsed in this article. Be very aware of the problems associated with voluntary health insurance! |
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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 Slue Shield program). A fairly comprehensive review about the availability, scope, and cost of individual insurance was recently published in the September, 2002, issue of Consumer Reports. 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. |
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Not Applicable |
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One of the key things to consider for a college- or university-sponsored health insurance program is an endorsement from the administrators/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. Be highly cautious if you hear that the coverage is very good in relation to the amount students pay in premium. 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 SHIPs. |
Student should have at least a $500,000 lifetime maximum benefit, and catastrophic coverage should be not be offered as an optional benefit. The first objective for any health insurance program should be to provide catastrophic coverage. The 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. Many plans now feature an unlimited coverage 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 $500,000 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 plan maximum). Another common problem is SHIPs 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 programs. These programs are precluded from denying access by 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, 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., 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. Many student health insurance programs located in these jurisdictions may have highly restrictive pre-existing condition exclusions. |
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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 also 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. |
Portability of coverage pertains to the need to continue 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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Except for COBRA, employer-sponsored plans generally do not provide any extension of eligibility following attainment of the maximum age for eligibility as a full-time college student. Many employer plans discontinue coverage at the first of the month following graduation. |
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Many student health insurance programs 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 SHIPs also include coverage for the spring semester automatically for the summer. This is a great advantage for spring graduates. |
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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 now 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 appropriate 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 of how firm the limit for care from non-participating providers will be for care 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. Just because there are adequate primary care physicians, specialists, and hospitals, does not necessarily mean that a health plan will provide appropriate access for mental health care services. |
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A common strong advantage of 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 unique advantage of SHIP 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 good 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% reduction in benefits). |
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Individual insurance programs will have a wide variety 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 will often have the lowest level of provider access, especially for non-emergency conditions. Many individual health insurance programs 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 to (1) directly transfer some of the cost of the program to the individuals who obtain benefits; and (2) discourage inappropriate usage of health care services. As noted above, a common advantage for SHIPs is integration with Student Health Service and Counseling Center charges. Many SHIPs have 100% coverage provisions for certain illness, injury, 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 a counseling center where students can obtain short-term therapy at either no cost or for 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 frequently 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 billing to a parent's health insurance company. As noted under the Confidentiality section, Explanation of Benefit statements under employer-sponsored plans will be 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 are much more likely to be provided at an adequate level under this form of coverage. |
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A common advantage of SHIP 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 also greatly reduced under SHIP coverage. Students who are concerned about the adequacy of the SHIP 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 SHIP program. |
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Many individual health insurance programs exclude mental health care services entirely. 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 eligibility for 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 SHIP programs for coverage of prescription drugs on an outpatient basis. Programs that exclude prescription drugs on an outpatient basis may be appropriate if there is sufficient subsidy for the cost of prescription drugs, especially psychotropic medications, from a Student Health Services pharmacy. |
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Many individual insurance programs only offer prescription drug coverage with an optional coverage rider. Others exclude prescription drug on an outpatient basis entirely. |
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Many employer-sponsored employee 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 these two needs 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. SHIPs that do not include this coverage should not be rejected, particularly if there is a net cost savings over alternative insurance options, and the SHIP otherwise provides appropriate coverage. Generally, it is not likely that a SHIP will provide either an effective dental insurance program or dental discount program unless the coverage is required as part of enrollment in the SHIP. If the SHIP 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 SHIP 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, following the passage of Health Insurance Portability and Accountability Act of 1996 (HIPAA). |
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SHIPs 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 passage of the Civil Rights Restoration Act of 1987. This requirement applies to both student and spouse coverage. In states where SHIPs 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 SHIP. |
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In most 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 also not required to provide pregnancy benefits. The Title IX mandates noted for SHIP coverage only apply to colleges and universities. |
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The definition of covered expenses and exclusions do not vary as much as you might expect for the majority of employer-sponsored group health insurance programs. 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 SHIPs relative to providing coverage with industry standard exclusions and covered expenses. SHIPs should not include 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" or "eligible service." Many SHIPs include limitations in these provisions that are also 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 in regard to 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 SHIP 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 that is provided to covered persons following administration of a claim is sent to the primary insured rather than the patient. Although EOB forms do not include diagnosis or procedure information, they do 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, in most cases, there is 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 SHIP 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 SHIP 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. |
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Unless you are fortunate 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 SHIPs 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 also see if your SHIP 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 should die while abroad. As is the case with the health benefits provided by a SHIP, 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, do not include emergency medical evacuation and repatriation coverage. |
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Employer-sponsored plans will not include provisions that will allow you to cover your spouse or children. Most employer sponsored plans will terminate your 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 SHIPs relative to the cost and adequacy of coverage for health insurance for dependents. Many SHIPs have an operating policy that is designed to have a nominal cost subsidy for dependent coverage from single students. A frequent advantage of SHIP coverage is access to the Student Health Service or Counseling Center for spouses. A small number of Student Health Services will also provide limited services for children. Even with costs that are very high, SHIP coverage may still be less costly than many individual health insurance alternatives. Unfortunately, many SHIP 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 disadvantage for individual health insurance is 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 very low likelihood of needing major health care services while they are enrolled in college. The risk associated with going uninsured are significant, and the need for catastrophic illness or injury coverage is significant in the college-age student population. Nothing in this article should be construed to be legal advice or legal opinion from Stephen L. Beckley & Associates, Inc. |
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