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Student Health Insurance and Health Care Reform

schoolCurrently, more than one million students in the U.S. are covered under college or university health plans. It is important to know that all student health insurance plans are not created equal. Some are comprehensive while some offer just bare bones coverage.

With health care reform on the horizon, many have voiced legitimate concerns over how the Affordable Care will impact young adults with student policies. In response, the Department of Health and Human Services (HHS) issued a final student health coverage rule to ensure that students not only have coverage options under the new plan, but also benefit from it.

Here are the major changes students need to know about:

No More Annual Limits (Eventually)

In the past, student insurance companies could impose an Annual Limit – a dollar limit on their yearly spending for covered benefits. Under the HHS’s final rule, student health plans cannot have annual limits of less than $100,000 on essential health 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.

For policy years beginning on or after January 1, 2014, annual limits on essential benefits are prohibited.

Increased Medical Loss Ratios

The Affordable Care Act requires that insurance companies comply with a new set of rules regarding their medical loss ratio (MLR). They are to spend at least 80 to 85 percent of premiums on health care services in order to help keep premiums low and ensure that premium dollars are being spent on medical services and not administration costs. Under the recent final rule, student health care providers will be required to adhere to the same MLR regulations.

No More Secrets

Until 2014 when annual limits become banned, providers of student health insurance must clearly inform you if a policy being issued does not meet minimum annual limits requirements. In addition, students must be made aware by the insurance company of their possible right to be covered as a dependent under their parents’ health insurance policy until the age of 26.

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