The IAA One Minute Blog

With the demise of the low cost, low benefit health plan, colleges are now dropping student health insurance for the 2012-2013 academic year. This situation stems from the 2010 healthcare overhaul. The overhaul was created to expand coverage to tens of millions of uninsured Americans, but it has eliminated some insurance options.

The End of the Limited Benefit Plan

Most colleges offer their students a "limited benefit plan," which covers health expenses up to a defined maximum benefit. Since these plans are capped, they are extremely inexpensive and very popular with students. These insurance plans are arranged by the schools and students pay the entire cost of the premium.

Since the Obama Administration has prohibited capping insurance payouts, premiums will dramatically increase. For the 2012-2013 school year, student health plans must cover $500,000 in medical expenses and by the 2014 academic year, benefit payments are "unlimited". Now colleges must choose between having their students see sharply rising premiums or dropping plans completely. Bethany College in Lindsborg, Ka. is one such example. The college offered a 12 month plan to its students this past academic year. The plan cost $445 while capping payouts at $10,000. The new rule would force students to pay more than $2,000. Now the college is no longer offering students health insurance.

The new rules will likely affect a broad range of colleges, particularly small ones. A Government Accountability Office (GAO) study found that 60% of school's plans of $50,000 or less (and almost all other colleges) would have a payout cap they would have to do away with in 2014.

The Department of Health and Human Services claim that the original coverage would not even cover the first night of a hospital stay.

Students' Options for Health Insurance

With the future of student health insurance in limbo, here are some options that might be available to students:

• Parent's Employer Provided Plan: Many students are still covered under their parent's health insurance and so they won't be affected by any changes their college may be making. The PPACA has allowed children to stay on their parent's insurance until they are 26 years old. If you are about to start college, consider staying on your parent's plan.
• School Health Plan: There are still many colleges that are offering plans, but there will likely be a hike in premium costs.
• Individual Insurance Plan

When students are sitting down to choose a college, they may want to think about schools with a health plan they can afford. Parents should also think ahead and choose a family plan that covers their children for all medical emergencies and subsequent care.

Please Note: The United States Supreme Court is reviewing the constitutionality of parts of the Patient Protection Act. If they find the Act unconstitutional, schools may be able to offer their popular low cost insurance option.

What IAA has to Say

With this changing world of healthcare, Insurance Administrator of America understands that these changes can leave you confused and unsure of what to do. That is why IAA is proud to offer employers and their employees the best coverage possible. When you work with IAA, you get the customized service you need and deserve. Remember, one call does it all.

Interested in other blog posts about the PPACA? Click here and here to read more!