Understanding Student Health Insurance and Expenses

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Americans aged 18-30 have always faced health insurance choices that are particular to their age group, especially college students. With the introduction of the Affordable Care Act (ACA), young adults now find themselves dealing with extra pressure to make smart choices. The ACA, also known as Obamacare, is structured so that its success will depend largely on the participation of young adults.

 

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Young healthy participants of any group plan are less likely to experience injury and illness, and are therefore less risky from a financial standpoint. Conversely, an older population is more likely to need care for chronic or catastrophic illness, raising potential costs for the insurer. Having a sizeable chunk of young people in the mix mitigates risk for all participants, theoretically lowering the total cost of healthcare. While this formula is true of any group policy, the ACA and the new marketplace it hopes to construct will need to draw on this demographic to succeed.

To this end, many of the changes mandated by the ACA heavily impact college students and graduate students. Some of the earliest provisions of the Act, such as extending student coverage on a family policy until age 26, have been directed towards students. While the end result of the ACA remains to be clear, it behooves young adults to pay attention to the changes in the health insurance marketplace.

Why Do I Need Health Insurance at All?

 

Young adults in their college years tend to be healthy, and it’s been a practice of many students to gamble on the benefits of youth and skip health insurance entirely. Aside from the fact that the ACA intends to require all Americans to purchase insurance in 2014, it’s still unwise to go uninsured. Skimping on a monthly premium may seem like a good idea when you’re in good health, but an unexpected illness or injury can put you in debt for decades, ruin your credit score and drastically impact your quality of life during your twenties and thirties.

Contrary to what may be considered popular wisdom, dangerous behaviors in the collegiate years can have long-term effects on your health.

Skimping on a monthly premium may seem like a good idea when you’re in good health, but an unexpected illness or injury can put you in debt for decades, ruin your credit score and drastically impact your quality of life during your twenties and thirties

These alarming statistics not only point to genuine health risks for students, but also to the need for costly health care. Excessive alcohol use has been definitively linked to deaths from binge drinking and traffic-related accidents. Drinking too much has emotional side effects as well; it can spur aggression that leads to violence and is often a factor in suicide and suicide attempts. When occasional weekend partying reveals itself as addiction, treatment and rehabilitation can be lengthy and expensive.

Sexually transmitted infections, often an offshoot of irresponsible drinking, can cause infertility in men and women; it is known that having an STI makes you statistically more likely to contract AIDS. Much about obesity has been published, yet it has not led 20-somethings away from excessive weight gain. Heart disease, diabetes, stroke, cancers and high blood pressure are just a few of the long-term health problems associated with an unhealthy weight.

Weigh the cost of an insurance premium against a lifetime of debt

As a young student, you may think that you’re immune to health problems like these. It may be true that you actively practice good health habits and behave responsibly, but even then, you cannot predict an accident or sudden catastrophic diagnosis. Weigh the cost of an insurance premium against a lifetime of debt, and make the right decision to carry health insurance at every stage of life. This guide will cover the different policies available to students and show you how to choose the one that’s best for you.

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Part I: Standard Student Health Insurance Coverage Options

As the health insurance market stands in 2013, traditional undergrads have three options for health insurance: a school-sponsored plan, use of their family’s plan or a single-payer plan that can be purchased on the open market. There are pros and cons to each of these options, and it’s important to carefully assess your options before you make a decision. Prices and benefits vary widely, and extraneous circumstances – some you might be totally unaware of – can affect your insurability.

School-Based Plans

Most colleges and universities offer an insurance plan to students. This area of healthcare law is changing rapidly; prior to 2013, campus insurance plans usually covered catastrophic events like hospitalization. The ACA, however, has charged post-secondary schools with meeting mandates for comprehensive coverage beginning in the fall of 2013. Many campuses are currently scrambling to develop a plan that meets ACA requirements. As this environment is evolving quickly, it’s particularly important to read the fine print.

In general, the shape of school-sponsored plans will be more comprehensive. Preventive coverage, expanded prescription options and hospitalization coverage should be the norm. For confirmation, ask whether the American College Health Association guidelines have been met. Though these guidelines are not law, if they have been met, it’s a good indication that your school is offering decent coverage.

Many important details may be buried in the fine print. When you’re researching your school’s options, there are a few variables to consider:

 

  • How does the network operate? Is there a choice of medical facilities located near the school? Some plans only cover expenses at an onsite campus health center.

 

 

 

  • What are the deductibles? Traditionally, even the old bare-bones campus plans had extremely high deductibles, often as high as $5,000.

 

 

 

  • Are there co-pays or deductibles in addition to the premium?

 

 

 

  • Does the insurance cover 12 months of the calendar year or only fall and spring semesters?

 

 

 

  • If the plan allows for off-campus coverage, is there a distance limit? Many school-sponsored plans limit coverage to areas near the school, meaning that students who travel far from home may not be covered in their hometown.

 

 

 

  • How is the plan funded? Given the changes in healthcare law, some schools may consider it advantageous to self-fund their insurance plans, exempting them from state mandates.

 

 

 

  • What is the lifetime coverage cap? Traditionally quite low, new ACA law requires that this number be no lower than $500,000.

 

 

 

  • Does the plan have dental, vision or reproductive health benefits?

 

 

some schools are beginning to make health insurance mandatory; pay attention to auto-renewal policies or insurance fees tacked onto tuition bills

In this unstable market, prices will vary as much as benefits; most campuses are charging $1,500 to $2,000 for the 2013-2014 academic year. Since the ACA has targeted this age group as one to benefit from healthcare reform, expect the details to change from year to year. Carefully review your policy for changes before you renew it. Be aware that some schools are beginning to make health insurance mandatory; pay attention to auto-renewal policies or insurance fees tacked onto tuition bills.

Individual Plans

Depending on your situation, it may be advantageous (though expensive) to purchase an individual plan. If your parent’s plan considers your school’s medical facilities out-of-network, for example, you will either need to opt in to the campus plan or purchase an individual policy. When a parent is out of work or in an unstable job, obtaining coverage under a family policy can ensure you don’t risk losing coverage during the school year.

Regardless of the reasons behind your decision, it makes sense to compare all three options before you make your choice; the current flux in the healthcare market means that benefits, exclusions, premiums and out-of-pocket costs differ widely.

An investigation of available individual plans for an undergraduate non-smoker attending school in a metropolitan area in 2013 revealed the plans listed below:

Health Insurance Individual Plans

Deductibles, premiums and other cost terminology explained in The Simple Dollar Guide to Health Insurance.

This example is for a basic comprehensive policy. None of the plans listed above cover dental, vision or maternity. Critical illness or accidents are also not covered, which must be taken into consideration.

Essentially, you get what you pay for on the open individual plan market. Premiums can be quite low, which is budget-friendly; however, deductibles and out-of-pocket expenses can be extremely high. Preventive care is often excluded in cheaper plans, and generally hospitalization is only partially paid for.

Example D, while roughly five times the cost of Example A, offers good coverage for preventive care and prescriptions, a low deductible, no charge for hospitalizations and no charge for in-network physicians. In the end, you must evaluate your needs and budget. It’s not smart to base your choice entirely on premiums; that is only one variable in the equation.

Essentially, you get what you pay for on the open individual plan market…It’s not smart to base your choice entirely on premiums; that is only one variable in the equation

Family Plans

If you are one of the lucky ones, your family insurance plan meets your healthcare needs while you are in college. Your parents’ premiums may increase slightly to account for your distance from home, or they may not change at all. Doctors you see at school may be considered out-of-network, in which case higher co-pays or coinsurance may apply. You may also have a policy exclusion regarding injuries sustained while participating in school sports, so be sure to read the fine print.

Thanks to the ACA, you may legally remain covered on this policy until your 26th birthday. You may even opt for COBRA to continue this policy for up to 36 months after you graduate. Jump to this guide’s section on COBRA.

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Part II: Student Health Insurance Plans for Recent Grads and Special Status Students

Plenty of young adults don’t fit the profile of a student who graduates high school and then goes on to a four-year college or university. Fortunately, there are several options – including ACA options – available for students who are international, traveling, in graduate school, lower-income or on other non-traditional paths. As with all healthcare plans today, the only constant is change. Pay close attention to details, compare all of the options available to you and factor in all potential costs, not simply the monthly premium.

International Students

Foreign students who travel to the U.S. for educational purposes have a different set of health insurance needs. Since these students are very far from home, their health insurance must be fully comprehensive. International student insurance not only provides a full complement of medical coverage, but also covers travel and other benefits to families in the event of an emergency.

Students must be traveling on an educational visa to qualify, and may not establish residency in the U.S. Students must also be enrolled on a full-time basis. Benefits often extend to a two-week travel window at the beginning and end of the designated educational period. Hospitalization is covered for a limited time, usually 60 days, after which a student must return to his or her home country.

As with all healthcare plans today, the only constant is change. Pay close attention to details, compare all of the options available to you and factor in all potential costs, not simply the monthly premium

General medical benefits usually include preventive care, emergency care, diagnostic testing and prescriptions for any condition that is deemed medically necessary. Maternity and neonatal care is included as long as the newborn was conceived after coverage began. Mental health and behavioral wellness are covered on a limited basis, as are injuries incurred playing school sports. Emergency dental coverage is also available in some instances.

In the unlucky event that you experience a medical emergency in the U.S. and have been hospitalized for at least 5 days, international student insurance will pay travel, lodging and meal expenses for a family member to travel to you. In the extremely unlucky event that you die on U.S. soil, your health insurance will cover the cost of repatriating your remains to your home country. An Accidental Death & Dismemberment clause is also included.

Premiums are based on age and are charged in U.S. dollars. The cost is roughly $38 per month for undergraduates and $56 per month for students earning an advanced degree.

Americans Studying Abroad

U.S. students who plan to study abroad in the short or long term should purchase health insurance separate from any existing plan. Being sick or injured in a foreign country can be frightening and disorienting, and you may even find yourself in a position where local health care is substandard. Fortunately, a simple Google query will help intrepid travelers obtain international student health insurance.

This type of health plan mimics the health plan for students traveling to the States to study, with two notable additions. In the event that it is deemed medically necessary, you will be evacuated to the nearest qualified hospital for treatment. The plan also covers injury from acts of terrorism as long as you have not refused governmental advice to leave an area of unrest.

Deductibles, co-pays and coinsurance requirements apply to these kinds of plans. These plans are defined by the maximum amount the insurance company will pay on your behalf, so you will have to estimate your needs. Consider your overall health, family history, your destination and the length of your stay as you calculate your maximum potential risk.

For example, if you intend to study abroad for one semester in your junior year, you can estimate that you will be out of the country for five months or so. Your coverage options start at $50,000 and increase incrementally up to $1,000,000. Based on your age, good health and destination in a metropolitan area of Europe, you choose a plan that will pay a maximum of $500,000. Not counting co-pays and coinsurance, this would cost you about $275 for the semester, or $55 per month.

Nontraditional Students

For students who attend school part-time or online, there is an option that is neither a school-sponsored plan nor a single-payer individual plan. This student plan requires membership in the College Parents of America; students may enroll for about $20. This group plan offers low deductibles and general medical coverage on an 80/20 or 70/30 cost split. Premiums, however, are quite high; undergraduate students pay roughly $550 per month and graduate students pay roughly $725 per month.

Traditionally, these plans have had very low maximum benefit caps, and essentially served as insurance for catastrophic events only. Since the ACA has disallowed maximum benefit caps as of January 2014, this kind of plan will need to evolve to meet the new mandates.

Low-Income Students

Currently, Medicaid is the existing healthcare option for low-income families regardless of their student status. Individual states manage federal funding to low-income families; eligibility is usually a percentage of the federal poverty level (FPL). Medicaid is public insurance and is funded by the government. These funds have traditionally been quite limited and families who qualified had very little net income.

This will change on Jan. 1, 2014, as yet another provision of the Affordable Care Act comes into play. If each state implements the new coverage provisions of healthcare reform, the income ceiling for Medicaid recipients will rise to about $15,000 annually. This figure is expected to dramatically affect college students with low income. How individual states choose to interpret and execute the provisions is as yet unclear, but it is reasonable to expect that more college students will be eligible for Medicaid than previously.

Recent Grads

Finally, you’ve completed your education (or at least for now) and are ready to enter the workforce. Until you can find a job in this struggling economy, though, you still need to ensure that your healthcare needs are covered. At this point you have a few options, depending on how you’ve been insured up until now.

    • COBRA from a family insurance plan: You may extend your coverage from your family plan for up to 36 months after your 26th birthday. COBRA is not cheap, because you will be responsible for 100% of a premium that your parents may have only paid a small portion of. However, it’s still cheaper than decades of debt or bankruptcy from unexpected healthcare costs.
    • Short-term Insurance: If you were covered by a school-sponsored plan, you may not extend it beyond your school days. Purchasing short-term health insurance while you job-hunt for a position with health benefits is your best option here.

Coverage lasts from 6 to 11 months and includes hospitalization, emergency care and related office visits. Previously, these plans had a pre-existing condition exclusion that made this policy more affordable for insurers; however, the ACA has banned the use of pre-existing conditions to deny coverage as of 2014. Time will tell how this type of plan is affected by healthcare reform.

Currently, in a short-term plan you may choose 80/20 or 50/50 coinsurance. Depending which you choose, you pay either 20% or 50% of the first $5,000 of eligible expenses, and then the plan pays 100% of costs after that. Deductibles do apply, and as with most plans, your premium goes down as your deductible goes up. An average monthly premium typically falls between $65 and $175 per month.

  • If you are seeking a job that is unlikely to provide benefits, or you prefer not to entrust your coverage to an employer in an unstable job market, then your best option is to purchase an individual policy.

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Part III: Strategies for Managing Student Health Expenses

As a student, you should be open to ways you can reduce costs everywhere you can, including healthcare. This means carefully examining options prior to choosing a health plan, and it also means using your plan in the most cost-effective way possible. Few college students have the luxury of 100% coverage; making smart decisions can keep your deductibles and co-pays down, meaning less money out of your pocket. Living healthfully and responsibly is also a choice, and consciously opting to minimize your health risks could mean fewer trips to the doctor.

be open to ways you can reduce costs everywhere you can, including healthcare. This means carefully examining options prior to choosing a health plan, and it also means using your plan in the most cost-effective way possible

Health Insurance Policy Exclusions

Insurance companies are notorious for excluding coverage on some procedures or prescriptions. It’s unsurprising that most won’t cover elective cosmetic procedures, for example, even if your crooked nose feels like an emergency to you. Vanity drugs that cause additional hair growth or clearer skin are of course not deemed medically necessary. However, there are other exclusions in some plans that may surprise you.

Health care exclusions that you might find questionable do appear on many policies. Some include:

  • Hospital room charges like phone, TV, extra pillows and sometimes Band-Aids or aspirin
  • Home health care (The CDC reports that 1.5 million Americans require up to 60 days of home health care annually.)
  • Prescription or therapeutic treatment for learning disorders or behavioral problems
  • Circumcisions
  • Charges from the first 24 hours of a hospital stay
  • Claims made within 30 days of coverage start date
  • Alternative treatments like acupuncture, massage therapy and biofeedback
  • Supportive braces or garments for deep vein thrombosis or joint problems

These are only a few examples of unwelcome surprises that could lurk in your health plan’s fine print. To avoid getting hit with an unexpected bill, you need to be aware of all policy exclusions.

How can you protect yourself?

Ask for the Summary and Benefits of Coverage (SBC). This standardized document is mandated by the Affordable Care Act and is designed to help you clearly understand your plan options. Limited to eight pages that must be in at least a 12-point typeface, the SBC must be made available to you when you apply and when it’s time to renew. Facts like deductible amounts, benefit caps and referral requirements must be listed, though premiums are not required. Because the terminology can be difficult to grasp, each SBC must be accompanied by a four-page glossary.

Other ways to be sure you have all the information you need include:

  • Asking for an itemized hospital bill or,
  • If you know you’re going to be hospitalized, comparing typical hospital charges against your plan’s exclusions
  • Also, each state has its own laws about inclusions; check to make sure your plan meets these mandates.
  • Ask questions about exclusions; some may be listed under other categories and easy to overlook.There is no law that prevents insurers from changing their exclusion lists, so check it for updates before you consider healthcare.

There is no law that prevents insurers from changing their exclusion lists, so check it for updates before you consider healthcare

Be a Healthier Student

There are things you can do to minimize your risk of injury or illness. Vaccinations against communicable illnesses like the flu are essential for students living in a dormitory or group housing. If you can’t get one at the campus health center, you may pay an office visit co-pay. That’s still an improvement over piles of over-the-counter medications, missed classes and general misery if you catch the flu. Increasingly, physicians are recommending meningitis vaccinations as well, because this infection is so contagious in crowded environments.

Get enough rest. This is probably a laughable idea to most students, but it does impact your health and immune system. Lack of sleep does more than make you cranky. It affects the metabolism, which can cause you to gain weight. High blood pressure, irregular heartbeat and memory lapses have all been traced back to inadequate sleep. Patients with chronic sleep loss also produce fewer of the body’s killer cells that fight off infection.

Exercise preventive health measures. If you’re a woman, don’t skip your annual pap smear; however, you can often have this at your primary care physician’s office and pay a smaller co-pay than at an obstetrician’s office. If you arrive at college with a known issue like seasonal allergies, keep taking your medication; get refills for your prescriptions at the student health center or at your primary care physician’s office and avoid seeing an allergist unless the problem becomes unmanageable.

Eat well. Even if dormitory food is less than appealing, try to have a salad a few times a week, or eat fruit when you’re snacking over homework. Take a multivitamin to counteract less-than-stellar eating habits. Be aware of places where there are likely to be a high concentration of germs, like keyboards in the computer lab. Wash your hands frequently and consider carrying hand sanitizer.

Taking some small steps like these and spending a little bit of money in the short term can save you major expense and hassle in the long term. There is no need to become a germaphobe, but awareness and a handful of good habits can make all the difference in how you feel, and therefore how much you get out of your investment in college.

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Part IV: Helpful Resources

Health care is essential, regardless how young and immortal you may feel. A minimal investment in your health can have long-term positive impact; you’ll have peace of mind knowing that your future won’t be shadowed by debt from uninsured medical expenses.

The Affordable Care Act’s earliest provisions were designed to make it easier for you to acquire and understand health insurance. Take advantage of this offering; carefully comparing your options and investigating the details of the plan you choose can protect both your health and your investment in higher education.

Health care is essential, regardless how young and immortal you may feel. A minimal investment in your health can have long-term positive impact; you’ll have peace of mind knowing that your future won’t be shadowed by debt from uninsured medical expenses

Resources that you may find helpful in your research of this important topic are listed below.

    • HealthInsurance.org: This comprehensive site breaks down individual health insurance terminology, provides breaking news and analysis as well as opinion blogs on changing state of healthcare.
    • Visitors Health Insurance Resources: Covering insurance concerns for travelers inside and outside of the U.S., this helpful site includes plan comparison tools, FAQs and a glossary of terms.
    • HealthFinder: Operated by the U.S. Dept. of Health and Human Services, this extensive site offers current health care news, insurance plan options and healthy living tips. Links to help you locate local services are also included.
    • Centers for Medicare and Medicaid Services: Discover whether you can apply for Medicaid as a student and how health care reform affects Medicaid, and read other useful information about health care and healthy living.
    • Implementation Resources: This U.S. Dept. of Health and Human Services website is devoted to a plain-English explanation of the current state of the Affordable Care Act. Links to state-specific information, implementation timeline and insurance options are just a few resources available here.
    • Health Insurance Glossary: This page, maintained by an independent insurance agent, offers an excellent A-Z glossary of the terminology used by insurers, medical specialists and policyholders.
    • The Health Care Law and You: The official site of the Affordable Care Act implementations and what they mean to you, this site offers detailed timelines, explanations of your rights, legal definitions and specific information related to the ACA’s impact on young adults.

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