Earlier this month, the U.S. Department of Health and Human Services (HHS) released a new proposed rule that takes an important step toward ensuring that students who purchase a health plan through their university or college will be able to benefit from the same basic consumer insurance protections in place for all individual market plans under the Affordable Care Act (ACA). The proposed rule represents an important victory for the more than one million students who are enrolled in these plans because the plans have historically varied widely in terms of both premiums and benefits — creating incredible hardships for some students.

For example, our partners at Young Invincibles have chronicled the stories of real students who have faced serious difficulties while covered by a student health plan including:

  • — A student with a plan that covered a maximum of $500 annually for over-the-counter prescriptions—leaving her without adequate coverage for her Type 1 Diabetes.
  • — A student with a plan that did not cover the amount of chemotherapy and testing her doctor determined was necessary during treatment for a rare form of cancer called Ewing’s Sarcoma—leaving her with $80,000 in medical debt.
For more stories like these collected by Young Invincibles, click here.

Thankfully, the proposed rule would ensure that students across the country have more protections than ever before because the following ACA individual market provisions would apply to student health plans issued after January 2012:

  • — Insurance companies would no longer be allowed to impose lifetime dollar limits on benefits in student health plans.
  • — When student health plan enrollees get sick, insurance companies would no longer be allowed to drop coverage because of an unintentional application error.
  • — Insurance companies would be prohibited from denying or excluding coverage for students under age 19 because of a pre-existing condition. In 2014, this would apply to students age 19 and over as well.
By proposing to apply these protections to student health plans, HHS is essentially saying that it does not consider student health plans to be so unique that they deserve to play by entirely different rules than other individual market plans.

HHS deserves quite a bit of credit interpreting the ACA in this way because there is language in the law that emphasizes that that the statue should not be applied in a way that would prohibit a college or university from offering a student health plan. Because HHS needs to pay attention to this part of the law as well, the proposed rule attempts to limit the way in which other consumer insurance protections apply to student health plans. For instance:

  • — Insurance companies, for their student health plans, would not be required to follow the Health Insurance Portability and Accountability Act’s guaranteed availability and renewability rules. To do so would require student health plans to be made available to individuals who are no longer students.
  • — Even though the ACA largely prohibits cost-sharing for preventive services, administrative fees charged by colleges and universities to fund student health services (including preventive services) would not be considered cost-sharing and would remain permissible under the proposed rule.
  • — Insurance companies would have more flexibility than other individual market plans as they phase-out annual dollar limits on benefits for student health plans. For policy years beginning anytime from January 1, 2012 to September 23, 2012, annual limits could be no less than $100,000. Student health plans would then be required to follow the same rules as other individual market plans, including a complete elimination of annual benefit limits starting on January 1, 2014.
The bottom line is that HHS has proposed to apply as many of the individual market consumer insurance protections as is permissible under the ACA to student health plans and this will make a enormous differences in the lives of many students enrolled in these plans.

Still hungry for more analysis about the new student health plans proposed rule? Check out this post at The Commonwealth Fund Blog and this post over at the HealthAffairs Blog.

— Patrick M. Tigue, Children’s Health Care Coordinator New England Alliance for Children’s Health