College Health Insurance 101: Peace of Mind for Back to School

By on August 5, 2014

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Going to college is one of the most important things you can do to secure your financial future. If you are going off to college, you need health insurance — whether it comes from your school, your parents , the government or your own provider — to ensure you have access to quality care at a reasonable price if you get sick or injured.

Poor health may be the last thing on the minds of young, vibrant college students. Do not be lulled into a false sense of security by your youth, activity level and apparent good health. Catastrophic accidents and sudden ailments can happen to anyone at any time, and expensive medical bills could derail all of your future plans. So it’s important to make sure you have health insurance coverage.

Thanks to the Affordable Care Act (ACA), the health reform legislation often referred to as Obamacare, students now have a variety of health care choices. Beginning in 2014, college students will have to abide by the individual mandate of the ACA, which requires most people to show proof of insurance or pay a tax penalty. To ensure you don’t get penalized, here are six health insurance options for college students headed back to school.

6 Health Insurance Options for College Students

Remain on Parent’s Health Insurance Plan

Thanks to the ACA health care reform, students under the age of 26 can remain on their parents’ health insurance. Super simple, right? Seems like the best option and for most students, it is; however, college life can cause a few wrinkles to this convenient provision.

For example, if a student is attending college in a different state, it is important to contact the insurance company to make sure there will be in-network providers near campus. If your parents’ coverage is a health maintenance organization (HMO), full coverage may only be available in the area where they live. Some HMOs have reciprocal arrangements or affiliated networks in other states that allow for full coverage in areas outside their local area, but that is something that you should investigate before you select this option.

Similar problems can arise with parental insurance that is based on a preferred provider organization (PPO). PPOs typically require you to get treatment from a medical provider within a predetermined network to get the best rates, and students may not be able to find one near school, forcing students to go home to get the lowest copayments and coinsurance. This possible absence of in-network coverage can create extra expenses for students, forcing them to make difficult choices if a severe or long-term illness took them away from school.

Large insurers often do have options for receiving care all over the country but parents need to check with their particular plan. In the case of a medical emergency, your parent’s health plan is required to cover services from any provider or facility (such as an emergency room) that provides immediate care, however, parents and students should find out if their insurer will reimburse emergency care claims in the college town.

Solutions: Save money by staying on your parents insurance if you can access care services. If care in your college area is difficult, schedule routine preventive care visits while you are at home on vacation in order to have access to the preferred network.

Sign Up with the University’s Health Care Plan

Many colleges offer their own health plans to students. A college may work with an insurance company which pays any claims or the school may be self-insured, offering their own plans which payout directly. These plans often appeal to older students no longer eligible to remain on their parents’ health insurance, but some student far from home may find them more convenient.

College health plans have a major advantage over other health insurance options because the premium costs are grouped with other higher education expenses — tuition and room and board — so your student loans are calculated with the cost of coverage in mind. Unfortunately, these plans may have much more limited coverage than other individual insurance, and may not pay for injuries to a student who violates code of conduct agreements (ie. is intoxicated or acting unlawfully).

The campus health care plans are wonderful since they oftentimes cover reproductive services that are often needed by young women, but they can also come with yearly limits on claims or doctor visits. So in the end it may not always be the best option for students. Students and parents should examine student health plans carefully.

Purchase Your Own Subsidized Plan on Health Insurance Exchanges

Since the complete rollout of the ACA in 2014, Americans now have the opportunity to shop for health insurance on new health insurance exchanges. For students without coverage under their parents, an employer or those looking to find more affordable options apart from their school’s health plan, the online marketplaces offer multiple options at various price points.

Buying a policy through your state’s health insurance exchange can make sense if your budget is tight. Using the marketplace can qualify students for tax credits to reduce their monthly insurance premiums. Depending on your income, it could be an enormous discount without sacrificing the quality of benefits provided.

Purchase Catastrophic Insurance

In the exchanges, individuals under 30 have the option of purchasing catastrophic health insurance with lower premiums and higher deductibles. A deductible requires the policyholder to pay all your medical costs up to a certain amount, usually several thousand dollars, before the insurance company would pay for essential health benefits over that amount. These plans are highly attractive to young adults in relatively good health who rarely need health services other than preventative care unless it is a major emergency.

Before springing for catastrophic coverage, compare the plans with more comprehensive exchange policies that may offer you a discount. One serious accident or unexpected disease diagnosis could lead to a real out-of-pocket hardship, or the high deductibles may make students reluctant to go to the doctor until they are really sick. In addition, you cannot use tax credits to buy catastrophic plans, so check to see whether you qualify for monthly tax credits to reduce your premiums on other insurance plans first.

Apply for Medicaid Coverage

Students who can’t afford insurance, and whose income is below a certain level, could qualify for Medicaid — a federal/state program providing health insurance to low income individuals and families. In the past, Medicaid coverage was limited to narrow populations, including children and pregnant women. As part of health insurance reform, states now have the option of expanding Medicaid eligibility.

Independent students under 65 years of age — not being claimed on their parent’s tax return — may enroll if they earn up to 133 percent of the federal poverty level. Unfortunately, many students do not have Medicaid as an option as student loans may disqualify them or their state may not have expanded coverage eligibility.

Risk Having NO Insurance

Very few Americans will be exempt from the law to carry health insurance beginning in 2014, however, there are exceptions to the rule, including members of Indian tribes and some religious groups. Some college students are likely to be granted an exemption since the individual mandate does not apply to people who do not earn enough money to file income taxes (those earning under $10,000 for a single person under age 65).

In that case, some students have the option of forgoing health insurance altogether; of course, such a decision should not to be made lightly. Without insurance coverage, students and their families could find themselves deep in debt should an emergency or illness require care.

Health Insurance for Peace of Mind

Before going back to school, parents and students should sit down with their trusted insurance agent to review all of their health care options to select a plan which fits their personal financial situation. Once each plan is weighed carefully, take steps to file for enrollment and secure insurance before the start of term at the end of August.

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