The U.S. Department of Health and Human Services (HHS) has drafted regulations that could lead to big changes in student health plans.
The Centers for Medicare and Medicaid Services (CMS), an arm of the HHS, is preparing to publish a proposed student health insurance coverage rule Friday in the Federal Register. Comments will be due 60 days after the official publication date.
"Thanks to the Affordable Care Act, college students will have more control over their health care," HHS Secretary Kathleen Sebelius says in a statement about the proposed rule. "This rule would ensure that these plans remain a viable, affordable option for students while guaranteeing that they are regulated consistently and offer transparent benefits to students."
HHS officials say they tried to take a middle course when developing the proposed rule.
The Affordable Care Act -- the federal legislative package that includes the Patient Protection and Affordable Care Act (PPACA) - includes many new health plan restrictions and requirements.
"Were certain provisions of the Affordable Care Act applied to student health insurance coverage, we believe it would effectively prohibit institutions of higher education from being able to offer these plans," officials say in the preamble.
Because of that concern, the proposed rule applies new requirements on student health plans but also eases some rules that could force the plans out of existence, officials say.
Most U.S. college students get coverage from their parents' employer-sponsored health plans, but student health plans probably cover about 600,000 to 1.5 million people, HHS officials estimate in a preamble to the proposed rule.
About 200,000 students and dependents of students may be enrolled in self-funded college and university health plans, rather than insured plans, officials say.
The U.S. Government Accountability Office found that student health plan annual limits it reviewed ranged from $15,000 to $250,000, with a median of $50,000.
Annual premiums ranged from $28 to $2,397, with an average $850.
ANNUAL BENEFITS LIMITS
Although HHS officials say they want to let student health plans continue to exist, the proposed rule could require sellers of many of the plans to make significant changes.
One Affordable Care Act provision - which was also included in the Commonsense Health Care Reform and Accountability Act bill, a major Republican alternative to the health system change bill that eventually became the Affordable Care Act - bans lifetime benefits cap and requires that annual limits be phased out.
HHS has released regulations that set the minimum annual limit for ordinary health insurance plans at $750,000 for plan years starting from Sept. 23, 2010, to Sept. 22, 2011. The minimum annual limit will increase to $1.25 million Sept. 23, 2011, and to $2 million Sept. 23, 2012.
HHS has granted temporary benefit limits rule waivers to hundreds of employer-sponsored mini-med plans.
For student health plans, HHS is proposing a minimum dollar limit on coverage for "essential health benefits" of $100,000 for
policy years beginning before Sept. 23, 2012.
After Sept. 23, 2012, student health plans would have to follow the same annual limit rules that apply to other health plans. Plans are supposed to eliminate annual limits in 2014.
OTHER PROPOSED RULE PROVISIONS
HHS has proposed a number of other student health plan requirements in addition to the phaseout of annual benefits limits:
- A carrier could not use the health status of a student or dependent when deciding whether to offer a student coverage.
- A carrier could charge student health fees but probably could not charge ordinary fees for the preventive health services that the Affordable Care Act requires a plan to offer free from cost-sharing charges.
- A student health plan would have to provide a notice indicating that it might not meet all Affordable Care Act requirements.
HHS officials say they probably would exempt student health plans from Affordable Care Act guaranteed issue and guaranteed renewability requirements, because the requirements are not compatible with the nature of a student health plan.
HHS officials note that temporary health insurance plans with a duration of 12 months or less are exempt from Affordable Care Act individual market protections.
Some student health insurance plan issuers are trying to design coverage durations to avoid coming under the Affordable Care Act, officials say.
"In many student health insurance plans, the term of the coverage is for a period less than 12 months-sometimes for only a day or even minutes less than 12 months- suggesting an intent to claim short-term limited duration insurance status," officials say.
Most student health plans can be renewed as long as a student stays in school, and HHS officials say they want to define plans that can be renewed while a student is in school as student health plans.
HHS officials are waiting to handle some questions until after they get comments.
Officials are asking, for example, for comments about how colleges and universities that operate student health services programs should apply Affordable Care Act provider choice requirements.
Officials also are asking how to apply the Affordable Care Act medical loss ratio (MLR) rules to student health plans. The MLR rules require ordinary plans to spend 85% of large group revenue and 80% of individual and small group revenue on health care and quality improvement efforts.