Rules Provide Transition Year for Self-Funded Student Health Plans
July 12, 2013
Under rules issued July 1, self-funded student health plans will be designated as providing minimum essential coverage under the Affordable Care Act for a one-year transition period. For plan or policy years beginning in 2015, however, sponsors of such plans will need to apply for recognition as providing minimum essential coverage. Minimal essential coverage is the standard used to determine if an individual's health insurance plan fulfills the coverage mandate at the heart of the ACA.
Student health plans don't fit neatly into the categories used to define plans under federal health care rules. They are considered a type of individual plan, not group plans, because they are not provided by employers. Most colleges and universities that offer student health insurance use third-party issuers to provide coverage. Those plans, if they meet the standards set in rules issued last year, are considered minimum health coverage for purposes of the individual mandate.
But self-insured student health plans fall into a gap in statutory definitions and are not subject to the rules for other student plans. This unregulated status led the Department of Health and Human Services (HHS) to develop a process for determining whether such coverage meets the standards for minimum essential coverage. Commenters on the original HHS proposal, which would have simply declared that self-funded student plans counted as minimum essential coverage, argued that some plans do not provide benefits equivalent to those required of other student plans.
Under the new rules, for plan or policy years beginning on or before December 31, 2014, self-funded student health plans will be deemed to provide minimum essential coverage. For plan years beginning after that one-year transitional period, schools would have to apply to HHS for recognition. To be recognized, the plan must meet all requirements of Title I of the ACA pertaining to non-grandfathered individual health coverage and submit an application. Once a plan achieves recognition, it will be included on a list published by the Centers for Medicare and Medicaid Services and be required to notify enrollees that the plan provides minimum essential coverage. Recognition can later be revoked if the HHS secretary determines the plan no longer meets the requirements.
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