The Student’s Guide to Health Insurance

Students are notoriously short on funds, but living without health insurance is no way to cut costs. And as of last year, it’s also illegal. Under the Patient Protection and Affordable Care Act (ACA), most legal residents of the U.S., including all citizens over the age of 18, must maintain certain coverage levels. College students are no exception.

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The Affordable Care Act

The ACA was signed into law in the spring of 2010, and new provisions for insurance carriers began just 90 days later. The second wave of changes, announced six months after the ACA passed, included the provision that young adult students be allowed to stay on a family health plan until the age of 26. In 2014, minimum essential coverage guidelines took effect, changing the shape of all health plans, including those for students.

These changes, along with many other modifications, were welcomed by many college students and their families. The ACA’s immediate impact to students was twofold:

  1. To provide families with the option to maintain the coverage students had as minors.
  2. To require that schools offering student health insurance plans comply with federal minimum coverage mandates.

Before the national coverage provisions and state insurance marketplaces, college students had few options when it came to healthcare. Young adults without employer-sponsored coverage commonly went uninsured or bought the cheapest, most bare bones policies they could find. Regardless of how you feel about the ACA, the bill has massively expanded the number and quality of coverage options available to students.

After the ACA: Rates of Uninsured Americans Drop, 2013-14

Image via The NYTimes' Upshot - NYTimes: “Obama’s Health Law: Who Was Helped Most”

While young people between 18-34 still make up the largest uninsured group in the nation, data collected since the passage of the ACA is encouraging. The uninsured rate among this age group fell from 21.6% to 14.2% in 2014; no other age group made comparable gains.

Now comes the hard part: identifying and weighing your policy options. Even for college students, best-fit policies can vary widely depending on circumstances and coverage needs. Our guide will help first-timers make sense of the insurance game. We’ve broken down the must-know insurance terminology, coverage types and essential considerations for students. Let’s get started.

Student Coverage Basics

When it comes to insurance, understanding its language and how it works goes a long way. At least half a dozen variables go into differentiating one policy from another; and each one carries its own financial implications.

It’s crucial to understand that a monthly premium is only the beginning of your out-of-pocket cost. If you cannot afford to pay the premium and the additional fees, you cannot afford the policy. Should you need medical treatment, understanding your obligations ahead of time can help you avoid a nasty surprise.

Must-Know Terms

In order to make an informed decision, it’s important to understand what you are being offered in exchange for your monthly premium. Before we examine your options in detail, take a moment to familiarize yourself with the basic terminology all insurers use.

  • Premium: What you pay, usually monthly, for your insurance plan. This is a bill, and is unrelated to other out-of-pocket expenses you are expected to pay.
  • Deductible: A fixed amount that you are expected to pay in the earliest part of your policy year. After you meet the deductible, your insurance plan covers all or part of your expenses until year’s end.
  • Coinsurance: The percentage of costs you pay after your deductible is met. Generally this is a percentage split by you and your insurance provider; 80/20 splits are common and mean that you are responsible for 20% of costs after the deductible.
  • Co-pay: Often confused with coinsurance, a co-pay is a fixed amount that you agree to pay toward specified expenses. A common example of a co-pay is the small flat fee you pay each time you visit a doctor or emergency room.
  • Network: A group of providers that contractually partner with your insurance carrier. Your insurance plan will incentivize you to choose from this network by charging you less for treatment by these providers.
  • Preventive care: Formerly not a provision you’d find in student health care plans, preventive care refers to the treatment of illness before it starts. Vaccinations, certain screening exams and annual checkups all fall under preventive care.
  • Group plan: In any insurance plan, all policyholders form a group. Within this group there are likely to be a mix of healthy individuals (most young adults) and those who require more care (seniors or people with chronic illnesses). Insurance companies need to offset the costs of participants who need a higher level of care, and group plans that include healthy people allow them to mitigate this risk and keep overall costs low.

Major Coverage Options

Once forced to choose between expensive, high-deductible single-payer insurance or whatever coverage a school wanted to offer, college students now have better choices for health insurance. Most college students have three options for health insurance:
  1. Purchase an individual plan on the open market
  2. Purchase student insurance
  3. Remain on the family plan

As you weigh your options, carefully consider your particular circumstances. Ask yourself the following questions, which apply to any individual in the process of choosing health insurance:

  • Am I a healthy young adult, or do I have a chronic illness or other condition that requires medical monitoring?
  • What are the deductibles for each type of service?
  • What coinsurance is offered after my deductible is met?
  • What co-pays can I expect for office visits or emergency room services?
  • Do I want prescription coverage?
  • Are there tweaks to my policy that can increase or decrease my deductibles?
  • What is the maximum out-of-pocket expense where my plan begins to cover everything?
  • How restricted is my provider network?
  • Can I use campus-provided health services for most medical needs or do I need to find a provider off campus?

Individual Plans

student_health_guide_smallAny adult can purchase an individual health insurance plan, sometimes called a single-payer plan; these plans are independent of your school or employer. While single-payer plans may look similar, there are often some key differences. A Health Maintenance Organization (HMO) allows you to choose any healthcare provider, for instance. HMOs usually offer extensive coverage but at a higher price.

A Preferred Provider Organization (PPO), on the other hand, requires that you stay within its contracted partner network, but generally costs less per month in premiums. Adults under age 30 can also purchase catastrophic health plans; these have low monthly premiums and very high deductibles. While basic preventive care is covered, these policies are really only useful in worst-case scenarios and should be regarded with caution.

College students might choose an individual plan if an existing limitation on the family policy prohibits insurance in another state, or perhaps offers a student coverage but at a higher price. These plans may be purchased through an insurance agent (though be warned that a commission will be charged), directly from the carrier or through the ACA Marketplace of federally compliant insurance plans.

The plans take effect on January 1 and run for 12 calendar months; if you intend to start school in the fall semester, advance planning will be necessary so that you have a plan in place at school. Full- or part-time enrollment status has no bearing on eligibility.


Student Plans

Once known for high deductibles and minimal coverage, today’s school insurance plans tend to be comprehensive. Schools may fund their own insurance policies or partner with an insurance carrier to provide students coverage.

Any school that offers insurance dependent on student status and that is not self-funded must meet the following minimum essential standards of coverage:

  • Ambulatory patient services
  • Emergency services
  • Hospitalization
  • Maternity and newborn care
  • Mental health and substance use disorder services, including behavioral health treatment
  • Prescription drugs
  • Rehabilitative and habilitative services and devices
  • Laboratory services
  • Preventive and wellness services and chronic disease management
  • Pediatric services, including oral and vision care

While self-funded school plans are not required to meet these minimums, many schools do so in an effort to be competitive. At the very least, preventive coverage is now a requirement for any student plan. Be aware that in this new world of health insurance, schools sometimes automatically enroll students in plans. When they do, you either opt out of the plan or get charged; some schools require proof of insurance if you do opt out. Be sure to read the fine print.

Private insurance carriers also offer dedicated student health plans. Typically, they fall under two policy categories “major medical insurance” and “short-term medical insurance.” A major medical plan often meets the minimum essential guidelines and provides competitive coverage to students within the plan’s network. Some carriers offer short-term plans, but these are limited in scope and do not meet federal guidelines. Most student plans, regardless of their origin, only provide coverage during the academic year.


Family Plans

One of the most lauded provisions of the ACA allows students to stay on family insurance plans until their 26th birthday or until an employer’s insurance plan takes over. For many families this is a sound option. You must be listed as a dependent on your parents’ tax forms to qualify; students who claim independent student status for any reason may not take advantage of this provision. Students still in school at age 26 may not continue on the family plan, though they are eligible for COBRA.

Details about the plan itself may affect your decision, and warrant scrutiny. If your family plan is an HMO, coverage near your home may be better than near your school. For example, some insurance carriers do not include reciprocal agreements in every state. PPOs can cause similar problems; their networks are typically more restrictive and penalties are imposed when you use providers outside the network. In that case, the added fees may be prohibitive.

Both HMOs and PPOs require you to have a Primary Healthcare Provider (PCP) as the first point of contact; some insurance companies will allow you to use Student Health Services as a PCP, but some may require you go off-campus. If you use your family plan, the best practice is to contact your insurer personally for explicit details on your coverage limitations before you arrive on campus.

Plans for Recent Grads and Special Status Students

Traditional undergraduates are likely to have an easier time acquiring health insurance than their peers in less conventional circumstances. Depending on individual plan provisions, students who live off-campus, attend classes part time or are older than 25 may not qualify for the student healthcare plans we have discussed. Fortunately, these students do have other options.

The demands of work and family prohibit many students from pursuing a degree on a full-time basis. Our educational system has made great strides in offering alternative means of learning to adult pupils, whether through distance education, evening and weekend classes or extended degree programs designed for the part-time student. If you’re a degree-seeking student taking a minimum of six credit hours, most schools will extend student health insurance to you.

Lower-income Students

One provision of the ACA allocates federal money to states who agree to lower Medicaid eligibility requirements so that more residents may qualify. If your state chose to participate, then it had to raise its income ceiling to 130% of the Federal Poverty Line (FPL) in order to qualify. For instance, a single student with no dependents who lives in a participating state, like Illinois, can qualify if their monthly income is less than $1,293. A single student in a non-participating state like Wisconsin cannot qualify unless they make less than $924 per month.

Disabled Students

Students who have an intellectual or physical disability should never be prevented from learning or from having adequate health care coverage. However, navigating the rules can be tricky. Adults who receive Social Security disability benefits are automatically enrolled in Medicare. There is no rule against these recipients’ attendance at college; however, periodic case review is a standard part of the Social Security program. If a case manager feels that, by attending school, you are increasing your ability to work and support yourself independently, you may lose your benefits.

If you are unsure of your ability to work after graduation, think carefully about seeking a degree. There are no restrictions on taking classes for personal edification. Students who have disabilities that do not prohibit full-time employment after college are eligible for any of the comprehensive health plans available to non-disabled students.

International Students

International students may purchase a healthcare plan from a vendor who specializes in international student insurance plans. These plans are ACA-compliant, and therefore comprehensive. Students of any age may enroll in coverage while studying in the U.S., though prices are often lower for students under age 25.

Usually, plans used by international students are PPOs that carry deductibles and coinsurance amounts. In addition to standard medical coverage, the costs of emergency evacuation and repatriation are covered. For U.S. students spending time studying abroad, identical health insurance plans are available for purchase. Some school plans or family plan providers may extend coverage overseas, but it is not required; check carefully.

Recent Graduates

Fresh college graduates usually face some insurance uncertainty. Graduates may not immediately find employment that offers affordable health insurance. The job search can take time, and in today’s job market, many newly-degreed students opt for unpaid internships or even graduate school in lieu of a full-time job. These young adults must have health insurance during this gap period.

Students on family plans who complete a degree in their early twenties have more time to find alternative coverage. However, after age 26, students must pay for COBRA. This option is a valid means of extending good coverage, but it is expensive and doesn’t last forever. Check with your individual or family plan for COBRA limitations.

New for 2015, the ACA provides for a special enrollment period for recent college graduates. If you take advantage of this option, you may purchase a plan from the Marketplace whenever your student health insurance ends; any year thereafter, your Marketplace eligibility is dependent on the standard open enrollment period in November. If you’ve attended college with an individual health insurance plan, these benefits will remain in place until the end of the year, at which time you may choose whether to renew your plan or discontinue it.

Depending on the school, this requirement can be met in any learning format, sometimes even online. Check with the schools you’re considering to find out their particular policy. Students who take fewer than six credit hours per semester may fall back on insurance plans offered independently of a school, whether by purchasing an individual plan or using a family plan for as long as possible.

Medicaid Expansion Map as of 2014

Students with a qualifying income are encouraged to apply for Medicaid. This form of public insurance, funded by federal and state governments, enrolls participants in a private health plan that covers most or all medical costs. Check with your state Medicaid office for details.

Medicaid_Map copy

You can review your state’s Medicaid eligibility income caps on the Medicaid website.

Strategies for Managing Health Expenses

The passage of the ACA has done much to eliminate insurers’ methods of extracting money from your wallet. Many industry standards, like charging higher premiums for policyholders with pre-existing conditions, are no longer legal. Still, insurance carriers are for-profit corporations, and you need to approach your policy options as carefully as you would any other major purchase.

Make a Wise Policy Choice

First-time policy buyers can follow a few rules of thumb to avoid overpaying for their coverage:

  1. Be wary of add-ons or riders that come with extra fees. Make sure you need the extra layers of protection they offer you. If you don’t, try to negotiate a plan with a lower premium and forego extra coverage.
  2. Resist the urge to choose a plan with a low monthly premium and a high deductible. Even if you are in perfect health, an accident can happen in a second. A very high deductible could haunt you for years.
  3. Be a conscientious consumer. File claims accurately and promptly and read your statements and records of service. Ask questions when you’re confused; many insurance companies will reward you for spotting a billing error.

Minimize Medical Expenses

Once you’ve found your best-fit policy, the second best way to save on costs is to take steps to avoid using it more than is absolutely necessary. Not every illness or injury can be prevented or foreseen, but there are proactive measures that can minimize your risk and maximize your spending dollar. Smart preventive steps can impact your body and your bank account; avoid a co-pay at the student health center by practicing healthy living.

Eat well

Any dorm resident can probably attest that this is challenging, but a little planning and creative shopping goes a long way. Simple choices, like avoiding sugar and eating fruits and vegetables, can effectively boost your immune system.

Stay hydrated

When you drink enough water, your organs work better, your muscles are energized, your skin is clearer and your belly functions best. When your body is operating at peak condition like this, you are best able to resist illness.

Hit the gym

The long-term cardiovascular benefits of regular exercise are well-documented. Additionally, maintaining strength and flexibility can help a typical college student avoid an injury during active recreational pursuits on the weekend.

Stay rested

Sleep, always a valuable commodity for students, accomplishes more than preparing you to tackle your studies. Adequate sleep is directly related to immune system function, and lack of it makes you more susceptible to colds and flu. In the long term, inadequate sleep is also linked to heart disease, obesity and diabetes.

Immunize

Consider regular vaccinations against flu, viral pneumonia and meningitis, particularly if you live in a dorm or other form of group housing. Many schools offer free flu shots at the beginning of flu season, so check with Student Health Services for more information. Regular hand-washing is also a powerful tool against communicable disease; make it a habit whenever you’ve been out in public. For those times when you can’t access soap and hot water, carry hand sanitizer.

Proactively manage your health

If you have a diagnosis like a chronic illness, or even something as simple as allergies, take care of yourself. Refill your medications on time and take them as directed. Annual pap smears are included in the ACA’s essential requirements for coverage; women have no reason not to see their doctor once per year.

If you do need to access your health plan benefits, do so wisely. Start with your PCP or Student Health Center before you see an expensive specialist; request generic medication whenever possible; and follow your medical professional’s instructions so that you’re back on the road to health as soon as possible.

Additional Resources

Selecting a health insurance plan can be daunting. Educating yourself about the ins and outs of coverage plans will take some time, but the more time spent researching, the higher the dividend will be in keeping you safe, healthy and financially secure.
  • HHS.gov: This comprehensive site hosted by the U.S. Department of Health and Human Services Department is the home site for the Affordable Care Act and its implementation. Learn more here about health insurance terminology and current events in our evolving healthcare system.
  • Healthcare.gov: Access the insurance Marketplace here, explore the plans available to you, get insurance price quotes and identify important deadlines.
  • HealthFinder: Also maintained by the Dept. of Health and Human Services, this extensive site offers quizzes and other interactive tools to help you learn to manage your health. Detailed articles on a number of health-related topics are also available.
  • Centers for Medicare and Medicaid Services: Find out if you can apply for Medicaid as a student, and learn more about what Medicaid offers. Links to state-specific information are also available here.
  • Student Health Insurance: Hosted by an insurance provider, this site offers a wide breadth of information specific to the healthcare needs of students. In addition to insurance-related concerns, eHealth offers informational articles on staying healthy in a collegiate environment.
  • Health Coverage Options for College Students: Detailed information from Healthcare.gov about the ACA and its effect on your options.
  • Next Steps: The ACA’s official resource for college graduates. Learn about your health plan coverage options as well as places to find low-cost healthcare services in your area.