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Health Insurance for College Students: How it Could Change

May 5, 2010 Jennifer Williamson, Distance Columnist | 0 Comments

College students and recent graduates are often stuck when it comes to health care. Colleges and universities often provide only basic coverage that works only for the students that stay healthy—premiums are often quite high for the actual coverage provided, and students who get sick or injured often have very high out-of-pocket costs. In addition, graduate students over the age of 24—younger in some states—often don’t have the option of staying on their parents’ plans. Some feel forced to go to graduate school just to keep health insurance through the school.

The changes to health care legislation enacted in 2010 are designed to improve the situation for students. While many of these changes won’t go into effect until 2014 and it’s not yet clear exactly how they will affect students in practice, here are a few things you could expect.

Student health insurance will have basic requirements

Big group plans offered by companies to their employees won’t be bound to offer basic coverage as defined by the government—but under the new law, universities can’t categorize themselves as big plans. Student health insurance should be categorized as individual.

Student Health Insurance


Individual plans will have to offer a certain level of coverage as a baseline. The coverage will have to be comprehensive, whether it’s sold on the insurance exchange—a large part of the health care bill—or privately through the school. Out-of-pocket expenses will be limited to $5,950 for individuals and $11,900 for families—the current limits you can save under a health savings account in 2010. In addition, these plans won’t be able to put an annual limit on your health care coverage.

This should effectively eliminate the very basic plans that most colleges offer their students today. However, it’s difficult to predict the law’s effect yet, as well as whether schools will be ultimately allowed to administer college health insurance as a group plan. A group of universities in the US is currently lobbying to have college-sponsored plans fall under the group category.

No more lifetime limits, pre-existing conditions, or retroactive cancellations

By October 2010, no health plan—group or individual—can put a lifetime limit on your coverage. They also can’t cancel your policy retroactively, or decide that your policy not only doesn’t cover current medical expenses but shouldn’t have covered past expenses, leaving you with a monumental health care bill.  In addition, by 2014 it will be against the law to deny coverage because of a pre-existing condition. These are changes that affect all health care plans, and should be of benefit to students as well as others.

Students can stay on their parents’ health insurance plans longer

Many parents choose to enroll their students in the college’s plan because it’s cheaper than keeping the kids on employee-sponsored plans. However, students who graduate may feel compelled to go to graduate school because they can’t get health insurance elsewhere—and they’re too old to stay on their parents’ plan. Currently, the age students can stay on their parents’ plans varies depending on the state. Under the new law, students across the country will be able to stay on their parents’ plans up until the age of 26.

Colleges may get out of the health insurance business altogether

Some colleges object to the laws categorizing their health care as individual because they basically operate as employers do, contracting with hospitals and other health facilities individually with underwriting from health care companies. The colleges collect the premiums and pay the claims. The colleges believe that the new law would undermine that system, limiting health insurance companies’ willingness to underwrite plans—and making it difficult for colleges to offer health insurance at all.

Additional options on the insurance exchange

Part of President Obama’s health care bill includes an insurance exchange designed to make it easier to compare and buy health care plans. This should make it possible for students to find health care coverage outside of school that offers basic coverage—even if universities are ultimately categorized as groups and therefore not required to comply with these requirements.

It will be tough to see exactly how the new laws will affect college students and recent graduates until after 2014, when the full scope of the law goes into effect. However, there are a few measures that may make things easier for college students. Hopefully, students should see their coverage situations improve—as should others throughout the country.


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