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Frequently Asked Questions
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The questions (Q) and answers (A) below attempt to answer most of the common questions; however, this document is only intended to highlight some of the ACA requirements applicable to student health insurance plans. It is not intended to be a complete description of any or all of the ACA requirements.
Q1: When are the final regulations effective?
A1. The final regulations generally are effective for policy years beginning on or after July 1, 2012.** Thus, if your policy year begins on June 1st, the final regulations will apply to your student health insurance plan on June 1, 2013. The medical loss ratio amendments are effective for all student health insurance plans as of January 1, 2013 regardless of the policy year. Grandfathering rules are effective for individual health insurance policies in effect on March 23, 2010; however, policy changes such as increases in coinsurance, elimination of benefits or significant increases in co-payments or cost-sharing will cause a loss of grandfathered status. Any coverage in which a student is newly enrolled after March 23, 2010 is non-grandfathered and subject to the ACA requirements applicable to student health insurance plans under the final regulations.
**Note that although the final regulations are not effective until policy years beginning on or after July 1, 2012, the proposed regulations containing virtually identical requirements were effective for policy years beginning on or after January 1, 2012. Thus, we expect that many insurers will have amended their student health insurance coverages for ACA compliance prior to the effective date of the final regulations.
Q2: Is my plan affected; how does ACA define “student health insurance coverage”?
A2. Not all health insurance coverage offered to students is included in the definition of “student health insurance coverage.” The final regulations define student health insurance coverage as a type of individual health insurance coverage for ACA purposes if it is provided pursuant to a written agreement between an institution of higher education (as defined in the Higher Education Act of 1965) and a health insurance issuer, and provided to students enrolled in that institution and their dependents, that meet the following conditions:
- Does not make health insurance coverage available other than in connection with enrollment as a student (or a dependent of a student) in the institution;
- Does not condition eligibility for the health insurance coverage on any health-status – related factor (i.e., health status, physical medical conditions, mental illness, claims experience, receipt of health care, medical history, genetic information, evidence of insurability, and disability) relating to a student (or a dependent of a student); and
- Meets any additional requirements that may be imposed under state law.
The final regulations do not set a minimum threshold for determining student status under student health insurance plan coverage (i.e., requiring enrollment in a specific number of course hours each term or seeking a degree). These eligibility decisions are left to each college or university and the insurer.
The preamble to the final regulations clarify that student health insurance coverage for purposes of the final regulations includes coverage offered by a consortia of universities or State boards of regents acting on behalf of an institute of higher education. However, the final regulations do not apply to student health insurance coverage offered by other organizations such as student associations or high schools, which must comply with the ACA as individual health insurance coverage unless another exemption is available. For example, student associations may qualify as “bona fide associations” under the ACA which are exempt from the guaranteed availability and renewability requirements (see Q/A 5).
Q3: What documentation is required; how would my student health insurance plan satisfy the written agreement requirement?
A3. The written agreement requirement may be satisfied with a master insurance policy between the issuer and the college or university.
If the college or university is not the policyholder and the students themselves are the policyholders, there must be a written agreement between the insurer and the college or university that clearly describes the college’s or university’s role in:
- selecting, terminating, and replacing the insurer;
- choosing or negotiating the policy terms;
- setting student and dependent eligibility terms;
- publicizing, endorsing, or recommending the policy to students and dependents; and/or
- providing students and dependents with assistance in obtaining benefits or appealing denials under the coverage.
The written agreement must also describe any eligibility for coverage, if any, for limited periods of time to students who are on breaks between academic terms, on temporary leaves of absence for medical or other reasons, or have recently graduated or otherwise ceased enrollment in the college or university.
Q4: Do the final regulations apply to my plan if it is a self-insured student health plan?
A4. No. The final regulations acknowledge that HHS has no authority to regulate self-funded student health plans. Self-funded student health plans are not subject to the ACA, but may be regulated by the states.
Q5: Is my student health insurance plan subject to ACA’s guaranteed availability and guaranteed renewability requirements?
A5. No. The final regulations exempt student health insurance plans from the requirements that enrollees be able to renew or continue the coverage at their option. Student health insurance plans are not required to be available for non-students or to enrollees who have ceased to be students. However, some flexibility is provided to allow temporary continuation of coverage upon the loss of student status. The preamble to the final regulations provides that 90 days would be a reasonable amount of time to allow a graduating student to transition to other coverage.
Q6: Can my institution continue to have a student administrative health fee?
A6. Yes. For ACA purposes, a “student administrative health fee” is a fee charged by the college or university on a periodic basis to students of the college or university to offset the cost of providing healthcare through health clinics regardless of whether the students utilize the health clinics or enroll in a student health insurance plan.
Q7: Can my student health insurance plan include lifetime dollar limits?
A7. No. Student health insurance plans may not establish lifetime limits on the dollar value of “essential health benefits” for any enrollee. This prohibition is effective for policy years beginning on or after July 1, 2012.
Q8: Can my student health insurance plan contain annual dollar limits on essential health benefits?
A8. Yes, but there is a specified transition period to 2014 when no annual limits will be allowed. Prior to 2014, policies are not required to cover essential health benefits; but if they are included in a student health insurance plan, the ACA restricts the maximum annual limit a policy may impose. In response to concerns expressed in the public comments that removing the annual limits would prohibitively increase the cost of student health insurance plans, the final regulations modified the proposed rule to phase in the maximum annual limits as follows:
- $100,000 for policy years beginning on or after July 1, 2012 but before September 23, 2012; and
- $500,000 (as opposed to $2 million) for policy years beginning on or after September 23, 2012 but before January 1, 2014.
Annual limits for “essential health benefits” are completely prohibited for policy years beginning on or after January 1, 2014. In addition, student health insurance plans must cover all essential health benefits effective January 1, 2014.
For example, a student health insurance plan with a $100,000 annual limit that renews on August 1, 2012, may retain the $100,000 limit for the 2012/2013 plan year, but will be required to increase its annual limit to no less than $500,000 when it renews on August 1, 2013. The plan will be required to eliminate its annual limit when it renews on August 1, 2014.
For these purposes, “essential health benefits” include:
- Ambulatory patient services;
- Emergency services;
- Hospitalization;
- Maternity and newborn care;
- Mental health and substance use disorder services, including behavioral health treatment;
- Prescription drugs;
- Rehabilitative and habilitative services and devices;
- Laboratory services;
- Preventive and wellness services and chronic disease management; and
- Pediatric services, including oral and vision care.
Q9: Can my student health insurance plan “rescind” coverage?
A9. No – except in very limited cases. Student health insurance plans may not rescind the coverage of an enrollee once such enrollee has coverage, unless the enrollee (or a person seeking coverage on behalf of the enrollee)
- performs an act, practice, or omission that constitutes fraud, or
- makes an intentional misrepresentation of material fact.
The student health insurance plan must provide at least 30 days advance written notice to each enrollee who would be affected before coverage may be rescinded. For this purpose, a “rescission” is a cancellation or discontinuance of coverage that has retroactive effect. However, a cancellation or discontinuance is not a “rescission” if:
- the cancellation or discontinuance of coverage has only prospective effect; or
- the cancellation or discontinuance of coverage is effective retroactively to the extent it is attributable to a failure to timely pay required premiums or contributions towards the cost of coverage.
Q10: Does my student health insurance plan have to cover preventive services?
A10. Yes. Student health insurance plans must provide coverage, and not impose any cost sharing, for “recommended preventive services” (e.g., vaccines). Note that the final regulations provide that “student administrative health fees” (see Q/A 6), are not “cost sharing” for ACA purposes. In addition, the preamble to the final regulations clarifies that issuers can arrange for a student health center to serve as an in-network provider for preventive care services offered students and can designate providers at such student centers to serve as primary care providers if there is sufficient capacity. This requirement is effective for policies renewing on or after September 23, 2010. Additional preventive care guidelines are effective for policies renewing on or after August 1, 2012 requiring coverage of preventive care specific to women, including well-women visits, STD counseling, testing for HIV, and contraception (see Q/A 11).
Q11: Does my student health insurance plan have to cover contraceptives?
A11. Yes. Effective for policy years beginning on or after August 1, 2012, student health insurance plans must provide (without cost sharing) access to all FDA-approved contraceptive methods, sterilization procedures, patient education and counseling for women with “reproductive capacity” as prescribed by a provider.
Religious Employer Exemption:
Religious organizations are exempt from the mandate to cover contraceptives for their employees. The final regulations generally define religious organizations to include faith-based groups that have a religious objection to contraceptives and whose employees primarily share their religion. Religiously affiliated employers such as universities and hospitals are not considered religious organizations for this purpose.Temporary Non-Enforcement Safe Harbor:
Certain non-profit institutions of higher education may be eligible for a one year non-enforcement safe harbor if under an applicable State law the institution does not, on or after February 10, 2012, cover contraceptives due to the organization’s religious objections. Institutions meeting this standard are not required to comply with the contraceptive mandate for any policy year beginning before August 1, 2013, if they comply with certain other requirements such as sending the requisite notice to the students enrolled in the student health insurance plan and the institution maintains on file the requisite self-certification. Additional guidance on the safe harbor, including model language for the notice and self-certification form, can be found on the HHS website at the following link: http://cciio.cms.gov/resources/files/Files2/02102012/20120210-Preventive-Services-Bulletin.pdfHHS has announced that it is considering alternatives for providing contraceptives to students of such institutions, including requiring issuers to provide the contraceptive coverage directly to the students at no cost. In addition, future guidance may expand the religious employer exemption to include institutions meeting the requirements of the temporary non-enforcement safe harbor either as an accommodation or expansion of the definition of religious organization for purposes of the exemption.
Q12: Does my student health insurance plan have to extend health coverage to adult dependents?
A12. Yes. If your student health insurance plan offers dependent coverage of children, it must continue to make such coverage available for an adult child until the child turns age 26 years of age.
Q13: Can my student health insurance plan impose a preexisting condition exclusion?
A13. No. Student health insurance plans may not impose any pre-existing condition exclusions on individuals enrolled in coverage who are under 19 years of age, including applicants for enrollment, who are under 19 years of age. This requirement would be effective for policy years beginning on or after July 1, 2012.
Student health insurance plans are prohibited from imposing pre-existing condition exclusions on any enrollees for policy years starting on or after January 1, 2014 (regardless of the enrollees’ age).
For this purpose, a “pre-existing condition exclusion” means a limitation or exclusion of benefits (including a denial of coverage) based on the fact that the condition was present before the effective date of coverage (or if coverage is denied, the date of the denial) under the coverage, whether or not any medical advice, diagnosis, care or treatment was recommended or received prior to such date. A “pre-existing condition exclusion” also includes any limitation or exclusion of benefits (including a denial of coverage) applicable to an individual as a result of information relating to an individual’s health status before such individual’s effective date of coverage (or if coverage is denied, the date of the denial) under the coverage, such as a condition identified as a result of a pre-enrollment questionnaire or physical examination given to the individual, or review of medical records relating to the pre-enrollment period.
Q14: Are health benefit claims procedures impacted by the ACA?
A14. Yes. The ACA establishes new internal and external review processes for an insurer’s decision regarding a health benefit claim, including expedited “urgent care” decisions and new content requirements for adverse benefit determinations. Enrollees must be (1) provided notice describing these procedures in a “culturally and linguistically appropriate manner,” (2) allowed to review their file and present testimony as part of their benefit claim appeals, and (3) allowed to receive continued coverage pending an appeal determination.
Q15: Can my student health insurance plan contain prior authorization requirements for emergency room services?
A15. No. Student health insurance plans providing emergency room service benefits may not impose a prior authorization requirement — regardless of whether the hospital is in-network or out-of-network. However, student health insurance plans may impose cost-sharing requirements for out-of-network services.
Q16: Will my student health insurance plan be subject to the minimum medical loss ratio requirement?
A16. Yes, subject to a transition period not applicable to other individual coverage. The final regulations confirm that the new medical loss ratio (“MLR”) requirement (80% of premiums must be spent on clinical services or activities to improve health care quality) apply to student health insurance plans beginning January 1, 2013. However, insurers are allowed to use “credibility adjustments” for 2013 (but not subsequent years), which will effectively increase the amount of expenses that are allowed before a rebate is owed for 2013. The final regulations also provide that the experience for student coverage is to be reported separately from other individual market coverage and that student coverage will be aggregated on a national basis for purposes of determining the MLR.
Q17: Does my student health insurance plan have to distribute explanations of coverage in a particular form?
A17. Yes. Effective September 23, 2012, issuers of student health insurance policies must distribute a comprehensive benefits summary and uniform glossary of terms to students and their beneficiaries who apply for and enroll in a student health insurance policy. This summary of benefits and coverage is intended to provide individuals with standard information to compare medical plans as they make decisions about coverage. The summary must (a) contain a standardized health plan comparison tool, (b) be no more than 4 pages, (c) use 12-point type, and (d) be written in a “culturally and linguistically appropriate manner.” The obligation to provide the notice is the responsibility of the issuer in insured plans and the plan sponsor in the case of self-insured plans. More information regarding the summary of benefits and coverage, including detailed examples, can be found on the Department of Labor website at the following links:
Final Regulations, available at http://webapps.dol.gov/federalregister/PdfDisplay.aspx?DocId=25818
Compliance Guide, available at http://webapps.dol.gov/FederalRegister/HtmlDisplay.aspx?DocId=25819&AgencyId=8&DocumentType=2
Summary of Benefits and Coverage Template, available at www.dol.gov/ebsa/pdf/SBCtemplate.pdf
Sample Completed Summary of Benefits and Coverage, available at www.dol.gov/ebsa/pdf/SBCSampleCompleted.pdf; and
Uniform Glossary of Coverage and Medical Terms, available at www.dol.gov/ebsa/pdf/SBCUniformGlossary.pdf
Additionally, the insurer must include a notice in the policy and any other written materials, including enrollment materials, that the policy being issued for the student health insurance plan does not meet all of the ACA requirements. The final regulations simplify the requirement in the proposed regulations and added a provision requiring a statement that the student may be eligible for coverage under a parent’s plan. This notice is required to be prominently displayed in clear, conspicuous, 14-point bold type. The model language for this notice is:
“Your student health insurance coverage, offered by [name of health insurance issuer], may not meet the minimum standards required by the health care reform law for the restrictions on annual dollar limits. The annual dollar limits ensure that consumers have sufficient access to medical benefits throughout the annual term of the policy. Restrictions for annual dollar limits for group and individual health insurance coverage are $1.25 million for policy years before September 23, 2012; and $2 million for policy years beginning on or after September 23, 2012 but before January 1, 1014. Restrictions for annual dollar limits for student health insurance coverage are $100,000 for policy years before September 23, 2012; and $500,000 for policy years beginning on or after September 23, 2012, but before January 1, 1014. Dollar limits on your benefits may not be the same as other types of coverage. Your student health insurance coverage put an annual limit of [dollar amount] on [which covered benefits — notice should describe all annual limits that apply]. If you have any questions or concerns about this notice, contact [provide contact information for the health insurance issuer]. Be advised that you may be eligible for coverage under a group health plan of a parent’s employer or under a parent’s individual health insurance policy if you are under the age of 26. Contact the plan administrator of the parent’s employer plan or the parent’s individual health insurance issuer for more information.”
Q18: Will my student health insurance plan have to make reports to HHS and enrollees regarding the quality of coverage?
A18. Yes. However, the reporting obligation falls on the insurers providing student health insurance plan coverage. The insurers must make annual reports to HHS and enrollees regarding coverage benefits which improve the quality care.
Q19: Is my student health insurance plan “short-term limited duration insurance”?
A19. Probably not. “Short-term limited duration insurance” is defined as
“health insurance coverage provided pursuant to a contract with an issuer that has an expiration date specified in the contract (taking into account any extensions that may be elected by the policyholder without the issuer’s consent) that is less than 12 months after the original effective date of the contract.”
Short-term limited duration insurance is specifically excluded from the definition of “individual health insurance coverage” (see Q/A2). Thus, most of the ACA requirements do not apply to short-term limited duration insurance.
Only student health insurance plans that cannot be continued for more than one year will qualify as short-term limited duration coverage. The preamble to the final regulations provide the following examples of qualifying coverage: (1) policies for foreign students studying for only one semester in the U.S. or (2) U.S. students studying abroad for a summer. The short-term limited duration insurance exemption from ACA does not apply to coverage that a student could have through the same health insurance issuer for one or more years during the course of his or her undergraduate or graduate education. The preamble to the final regulations further provide that the Centers for Medicare & Medicaid Services (CMS), which has authority to enforce these rules along with the states, will be monitoring insurers for proper classification of student health insurance plans as either individual health insurance or short-term limited duration insurance coverage. The preamble also provides that CMS is authorized to assess penalties for failure to comply with these requirements.
Q20: Do any special rules or exemptions under the ACA apply to policies for international students?
A20. No. The preamble to the final regulations clarify that all student health insurance must comply with the applicable provisions of the ACA without regard to the citizenship of the student insured. International students with a J-1 visa are also required to carry a minimum level of health insurance coverage by the State Department, and those requirements are not eliminated as a result of the application of ACA to such policies. In the preamble to the final regulations, HHS confirms that the ACA and State Department rules do not conflict. Note that insurance sold to international students attending only one or two semesters will most likely qualify as short-term limited duration insurance coverage exempt from the ACA (see Q/A 19).
Q21: Why is my student health insurance plan exempt from certain ACA requirements?
A21. Given the unique characteristics of student health insurance plans and ACA’s rule of construction for such plans, the final regulations specify that a limited number of ACA requirements are inapplicable to student health insurance plans. The ACA rule of construction for student health insurance plans provides that
“nothing…[in ACA] shall be construed to prohibit an institution of higher education (as such term is defined for purposes of the Higher Education Act of 1965) from offering a student health insurance plan, to the extent that such requirement is otherwise permitted under applicable Federal, State or local law.”HHS interprets this ACA provision to mean that if particular ACA requirements would, as a practical matter, have the effect of prohibiting a college or university from offering a student health plan otherwise permitted under Federal, State or local law, such requirements would be inapplicable. HHS has identified several provisions in ACA that would have this effect and several others that might have this effect, including ACA’s guaranteed availability and guaranteed renewability requirements (see Q/A 5).
Q22: How do the pending legal and political challenges to the ACA impact my student health insurance plan’s requirement to comply with ACA and these final regulations?
A22. A number of legal challenges regarding the constitutionality of the ACA are pending before the Supreme Court — but a decision is not expected until June 2012. Until such a determination is made, or a repeal is enacted into law, the ACA is law and remains in full force and effect.
Q23: Is additional ACA guidance expected?
A23. Yes. The IRS, U.S. Department of Labor and U.S. Department of Health and Human Services (“HHS”) are expected to issue additional guidance in the coming months and years. States will also likely issue guidance relating to the ACA’s state mandates.
Q24: What actions should my student health service (SHS) be taking now?
A24. Most ACA requirements apply to insurers providing student health insurance coverage rather than directly to the SHS. Thus, the insurers will have most of the compliance obligations. The policies issued for insured student health insurance plans must comply with the ACA requirements unless specifically exempted from such requirement.
There is considerable diversity in how colleges and universities design their student health insurance plans in order to meet their particular needs. Thus, colleges and universities (and their SHSs) should immediately initiate discussions with their insurance providers, benefits consultants and legal counsel to assess the ACA’s impact on their student health insurance plans and coordinate timely compliance.
Q25: What are the individual coverage mandates? Will my student health insurance plan satisfy the individual mandate?
A25. Starting in 2014, individuals (unless excluded or exempt) will be required to obtain “minimum essential health coverage” for themselves and their dependents or will have to pay a penalty.
“Minimum essential health coverage” includes:
- Medicare, Medicaid, a Children’s Health Insurance Program, TRICARE and veteran’s health care program;
- Health insurance coverage offered in a state’s individual market; or
- Other coverage designated by HHS.
HHS has not yet designated what other coverage will be considered “minimum essential health coverage.”
Individuals in any of the following groups are excluded from the individual coverage mandates:
- Individuals who are not lawfully in the United States;
- Individuals who are incarcerated;
- Religious conscience objectors; or
- Members of a health care sharing ministry.
International students are not excluded as a group.
Similarly, individuals in any of the following groups are subject to the individual coverage mandates, but exempt from paying the penalty if the mandate is not satisfied:
- Individuals who have “unaffordable coverage” (based on household income and required contributions for coverage);
- Individuals who have income below the threshold for filing a tax return;
- Individuals who are members of an Indian tribe;
- An individual whose first coverage gap experience of a calendar year lasts less than 3 months; or
- Individuals who apply for and receive a hardship exemption from HHS.
Student health insurance plans are designated as a type of individual market coverage that we expect will satisfy “minimum essential health coverage” if the student health insurance plan meets certain ACA requirements.
Q26: What are the “health benefit exchanges” implemented by the ACA?
A26. Each state is required to establish a “health benefit exchange” effective in 2014 to help individuals and small groups purchase “qualified health plans.” A “qualified health plan” must (1) provide the essential health benefits package, (2) be offered by a licensed insurer, and (3) certified by the exchange as qualified. The exchanges are intended to make the comparison of coverages that have met specified quality requirements. However, no one will be required to purchase health insurance coverage through the exchange.
Plans sold through the exchange will offer an “essential health benefit package” that provides essential health benefits determined by the state under guidance issued by HHS, limits cost-sharing for such coverage, and provides either the bronze, silver, gold or platinum level of coverage (as defined by the ACA based on actuarial values of coverage).
Q27: Do any of the ACA requirements for my plan expire in 2014?
A27. Yes.
Annual limits on essential health benefits, which could be applied on a restricted basis prior to 2014, are completely prohibited starting in 2014 and beginning January 1, 2014, student health insurance policies must cover all essential health benefits (see Q/A 8).
Also, beginning in 2014, pre-existing condition exclusions for all individuals, regardless of age, are prohibited — this prohibition only applied to children under 19 prior to 2014 (see Q/A 13).