New Rule Cuts Student Health Plans Temporary Breaks

Beginning next school year, student health insurance will fall in line with many of the requirements established under the 2010 health law – with some temporary exceptions announced Friday in new rules released by the Obama administration

Student insurers and higher education groups had been waiting for months on the final set of rules from the Department of Health and Human Services, and many had asked that the requirements instead be delayed until the 2013-2014 academic year.

On the hotly debated subject of contraception coverage, federal officials said that rules still in development for employees of religious colleges and universities will also apply to students at those institutions. Schools that use an outside insurer will be offered a one-year exemption before they have to comply with the contraception mandate. Schools that instead self-fund their student plans will not have to cover contraception, according to HHS.

Here’s what HHS said Friday:

  • Beginning with the 2012-2013 school year, plans cannot have an annual dollar coverage limit less than $100,000. That rises to $500,000 the following school year, with an annual limit prohibited beginning in 2014.
  • Starting in 2013, student plans will be required to spend a certain percentage of every plan dollar on care, as opposed to administration, other costs and profits. During that year only, HHS will perform a special calculation that will mitigate the impact for some plans. In 2014, however, 80 cents of every dollar will go toward care – in line with most other forms of insurance.
  • Insurers must provide notice if the policy does not meet minimum annual limits requirements, and that students up to the age of 26 may be eligible for coverage under their parents’ policy.