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Business and Policy Areas
Business and Policy Areas

Final Rules Issued on Student Health Insurance

March 26, 2012

New rules for student health insurance plans under the Affordable Care Act, published on March 21, will take effect for plan years beginning on or after July1. Student health insurance plans will be regulated as a type of individual coverage, because they don’t meet the statutory definition of a group plan. Several provisions in the final rules were modified in response to comments received as a reaction to a notice of proposed rulemaking issued more than a year ago. The changes include offering a one-year grace period for required coverage of contraception by student health plans at institutions with religious objections, as offered to employers in guidance released in February. Key provisions in the final rules are discussed below.

Definition. A student health insurance plan is defined as a plan that:

  • Is offered under a written agreement between an institution of higher education and an issuer. The preamble to the final rules clarifies that a consortium or system of institutions may enter into an agreement with an issuer covering students at more than one institution.
  • May only be offered to students of the institution and their dependents. Institutions may define which dependents are covered. Eligibility must be tied to enrollment.
  • May not restrict eligibility based on pre-existing conditions.

Note: Self-funded student health plans do not fit the statutory definitions of either health insurance coverage or group health plans and are not covered by these rules.

Annual Limits. The rules phase in a prohibition on annual coverage limits for student health plans. Annual limits are set as follows for plans beginning:

  • Between July 1 – September 22, 2012: $100,000
  • September 23, 2012 – December 31, 2013: $500,000
  • January 1, 2014, and later: no limit

Note: This is a more gradual elimination of annual limits than those allowed for other types of plans.

Student Health Fees and Clinics. Student health fees—periodic fees charged to students to cover costs of student health clinics—will not be considered cost-sharing for preventive services. Campus health clinics may be designated as the in-network provider under the student health insurance plan “provided that the centers have sufficient provider capacity and range of services available to support this designation.”

Preventive Health Services. Student health insurance must cover “preventive health services” without cost-sharing. The release of interim final rules last August delineating these services for other types of plans caused considerable furor over coverage of contraceptive services. In February, the administration proposed a compromise that would require the issuer, rather than the sponsoring entity, to provide separate coverage for contraception (without charge) when the sponsoring entity had religious objections to such coverage. The same compromise would be extended to nonprofit colleges and universities in relation to student health insurance plans under the final rules, with an extension until policy years beginning after August 1, 2013, in order? to work out the details.

A separate advance notice of proposed rulemaking on the accommodations for religiously-affiliated organizations was published in the Federal Register on the same day as the student health insurance plans final rules. Comments in response to that notice are due by June 19.

Notice. Issuers of student health insurance that does not meet the standard annual maximum limits applicable to other individual coverage must provide a notice informing students of that fact and the limits of the policy. The notice needs to also inform students that, if they are under 26, they may be eligible for coverage under their parents’ policy. Model language for the notice is included in the final regulations.

Foreign Students. The preamble to the rules notes that the Affordable Care Act sets requirements for insurance plans offered in the United States, without regard to the citizenship status of the consumer. Therefore, there is no statutory basis for allowing different requirements for plans offered to foreign students. In some circumstances, such as students who attend an American university for less than a year, student coverage may be sold as short-term, limited-duration plans that are not covered by the Affordable Care Act.

Medical Loss Ratios. The final rules phase in a medical loss ratio requirement at 70 percent for 2013 and 80 percent for 2014. The medical loss ratio looks at the percent of premiums spent on health care and quality improvement programs. As under the rules for group plans and other individual plans, issuers will be required to rebate money to student consumers if the targets are not reached.


Anne Gross
Vice President, Regulatory Affairs