New Agency Guidance and Relief on Offering Student Health Insurance | Blog | MMA

New Agency Guidance and Relief on Offering Student Health Insurance

February 21, 2016

On Feb. 5, 2016, the Departments of the Treasury, Labor, and Health and Human Services (the Departments) issued a technical release (2016-01) addressing the application of market reforms and other provisions of the Affordable Care Act (ACA) to student health coverage, and providing temporary transition relief from enforcement by the Departments for non-compliant colleges and universities.

The release discusses previous guidance which established that employer payment plans (EPPs) (i.e. arrangements that reimburse employees for all or some of the premium expenses incurred for individual market coverage) and health reimbursement arrangements (HRAs) that do the same will fail to comply with certain ACA market reforms; namely, the prohibition on annual dollar limits and the requirement to provide certain preventive services without cost sharing.

That previous guidance also provided that these health care arrangements wouldn’t violate the market reforms when integrated with a group health plan that does comply with those requirements, as long as they do not reimburse premiums for individual market coverage. HHS has previously defined “student health insurance coverage” as a type of individual market health insurance coverage that is offered to students and their dependents under a written agreement between an institution of higher education (as that term is defined for purposes of the Higher Education Act of 1965) and an issuer.  So, in some cases, when a school defrays the costs of student health insurance through a subsidy, it creates an EPP and violates the ACA market reforms.

Many colleges and universities provide students (typically graduate students) with student health coverage at reduced or no cost as part of their student package, which often includes tuition assistance and a stipend for living expenses. For these students, the bill they receive from the school for the health coverage premium may take into account a premium reduction arrangement. It appears that, if the amounts are paid towards student health insurance coverage in a student’s capacity as an employee (as a graduate assistant), then the subsidy is an EPP and subject to the market reforms.

The Departments recognize that many schools have unintentionally been using EPP arrangements, and that schools may need additional time to adopt a suitable alternative or make other arrangements to come into compliance. Accordingly, the Departments indicate that they will not assert that a premium reduction arrangement fails to satisfy the ACA’s mandates regarding annual limits and preventive care if the arrangement is offered in connection with other student health coverage (insured or self-insured) for a plan year or policy year beginning before January 1, 2017 (therefore including, for example, plan years or policy years that are roughly coterminous with academic years beginning in the summer or fall of 2016 and ending in 2017).

Educational institutions should be reviewing all health coverage offered to students and determining whether the coverage offered is student health insurance or coverage under an employer’s group health plan, to make sure that all coverage offered meets the requirements of the ACA.