International Educator - March/April 2013 - 56
INTERNATIONAL EDUCATOR M A R + A P R . 13
go to the U.S., Canada, or England and I
look at what it’s going to cost me in medical insurance to study in the U.S., it may
make more sense to go elsewhere.”
Under the new law—colloquially called
“Obamacare”—university students must
now buy “minimum essential health coverage” for themselves and their dependents.
The coverage must have an annual limit of
no less than $100,000 for “essential benefits”
for policy years beginning on or after July 1,
2012, but before September 23, 2012, and
$500,000 for policy years beginning on or
after September 23, 2012, but before January 1, 2014. There are no lifetime limits on
the dollar value of “essential health benefits,”
which include preventive care, emergency
services, hospitalization, lab services, and
maternity and newborn care. Plans must
have at least $100,000 in prescription drug
coverage each year. Additional requirements—including fines for the uninsured
(with some exceptions) and no annual
spending caps on essential benefits—began
to phase in on January, 1, 2013. Spending
caps on essential benefits are entirely prohibited after January, 1, 2014.
International students studying in the
United States are not necessarily exempt.
In fact, while many domestic students
may take advantage of provisions allowing
them to attend school without insurance
if they earn below-poverty wages, international students can’t use this exemption.
That’s because many international students in the United States were required
under their visas—and even before the
ACA—to carry medical insurance, even
if their domestic counterparts were not
(J-1 visa holders must have insurance but
this does not apply to every visa category
in which an international student may be
applicable to his or her situation).
The beefed up coverage rules—with
their high annual limits and generous prescription coverage—are significant enough
that “the policies that most international
students used to have are really no longer
considered policies under the new law,”
said Paul Clancy, director of risk manage-
New Law Impacts Domestic Students, Too
T WAS LITTLE SURPRISE to insurance broker Teresa Koster when she learned
in late November that a small Maryland college would be dropping the health
insurance plan it offers students.
The Patient Protection and Affordable Care Act (ACA), which requires college
and university students to buy insurance with substantial benefits (see main story),
meant it was a matter of time before schools concluded they either couldn’t afford
the generous plans the law requires, or couldn’t afford to lose prospective students
who won’t pay for them as part of their school “fees.”
“Schools now have to take on a more elaborate role in understanding health
care in the U.S.,” said Koster, a division president at Arthur J. Gallagher, a consulting
brokerage risk management firm specializing in insurance “We’re trying to figure out
how universities can wade through this maze.”
The new health care law could affect smaller universities and public institutions
the most. Many such schools either don’t offer their own plans—or offer low-cost,
limited ones—which means students are left to the mercy of insurer-provided plans
that can be far more expensive.
“The big shakeup was increased premiums for older students, and they weren’t
happy about it,” said Jennifer Haubenreiser, director of health promotion at Montana State University, where insurance plans now run $1,700 to $2,200 a year under
the ACA. “For them, premiums increased about $800 a year. But if you call up an
insurer right now, it’s through the roof.”
In a paper last summer for the University Risk Management and Insurance
Association, Myths, Facts, and Realities of Health Care Reform within the Student
Health Insurance Marketplace, Koster said she believes the ACA will convince many
students to claim an exemption allowing them to remain uninsured if they earn less
than $11,170 a year.
“Students may say, ‘I’m below $11,170, so I don’t have to show proof,’” Koster said
in an interview.
The Individual Mandate going into effect in 2014 will have an initial penalty of
$95 or 1% of individual’s income—whichever is greater, according to Koster. Individuals not subject to the penalty are undocumented immigrants; those with individual
income below the IRS tax filing threshold, currently at $11,170 or family income below $23,050; those who would be required to spend 8% of their individual income
to purchase health insurance; incarcerated individuals, or members of a religious
group that opposes benefits from a health insurance policy.
“Given the above exceptions, many students could be exempt from the tax penalty and may ultimately stay uninsured if their institution does not offer a student
plan through a hard waiver enrollment method,” warns Koster.
Student with earning below the income levels outlined in the ACA will be eligible
for a premium subsidy on January 1, 2014.
The ACA allows students to remain on their parents’ plans until they turn 26.
Parents’ plans, however, tend to have restrictions on care for children studying out of
state. On the other hand, parents with several children likely get insurance discounts
that colleges can’t offer, said Paul Clancy, director of risk management at Boston University, since most health plans have one flat premium to add coverage for children,
whether the coverage is for one child or several.
About 35 institutions self-fund their insurance plans, so a school collects premiums, invests them, and handles claims itself. Self-funded student health plans are
not subject to the ACA, but may be regulated by states.
How state laws may conflict with the ACA remains to be seen. For instance, Michigan State University (MSU)—until early last year—was the first public university in
the state to mandate health insurance for students—both domestic and international;
students at MSU are automatically enrolled in the university health plan. The school
noted that 25 percent of public universities nationwide had the same requirement.
But the university dropped the mandate after opposition from state lawmakers.