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How to Save on College Health Care

Students shopping for a college may soon have to consider the quality of the campus health plan along with the academics.

Rob Byron / Shutterstock.com

President Obama’s Affordable Care Act requires individuals, including students, to have a level of coverage well beyond what’s traditionally been offered by most colleges.  As a result, premiums are rising by several hundred dollars a year to around $2,000 per student, The Wall Street Journal reports. And while the new health-care law allows parents to enroll children in their own insurance plans until age 26, experts say there is still a lost generation of young people without coverage. “If it’s a close call between two colleges, students should make health insurance the deciding factor,” says Stephen J. Rose, a research professor at the Georgetown University Center on Education and the Workforce in Washington, D.C.

Analysts say rising premiums will hurt one group of students in particular: those whose parents can’t afford decent health care of their own. Young people have the highest uninsured rate of any age group — 30% for those aged between 19 and 25, the period most students spend in higher education – according to the non-profit Kaiser Family Foundation.  Half of the uninsured young adults come from low-income families, the foundation said. Meanwhile, students are spending more years in undergraduate and graduate school due to the weak economy, says Kevin Flynn, president of Healthcare Advocates.

Students shouldn’t feel pressured into signing up for college health plans, as they’re often not as generous as those obtained through the individual market, experts say. For instance, college plans sometimes stipulate a sick student must visit the college medical center for a doctor’s referral, which could delay or even preempt a much-needed hospital visit, says Aaron Smith, executive director of Young Invincibles, a student health-care reform group. Other schools have required students to purchase a “school mini-med plan” with annual benefit caps as low as $1,000. These provide “almost no protection when students actually get sick or injured,” Smith says.

To avoid paying more, parents should think ahead and choose a family plan that covers their children for all medical emergencies and subsequent care — even when they’re going to school out of state, experts say. “Not doing this is the predominate reason parents take out an additional student health plan,” Flynn says. Most employer health-care plans have basic out-of-state-coverage for children, he says. For those that have only have limited out-of-state coverage, he suggests a high-deductible student health plan, which typically starts at $100 a month and would satisfy the rules under Obamacare. Students should then return home for all other routine care and prescriptions. That means lower monthly premiums, of course, but could also result in higher out-of-pocket expenses if the student develops a serious illness or has an accident on the football field.

To be sure, the new law does may make some student health plans more appealing. For one, it prohibits all plans from having “lifetime coverage limits” — where a serious illness or accident could max out their health coverage. It also bans excluding students under 19 for pre-existing conditions, says Mark Kantrowitz, publisher of FinAid.org, which tracks student debt.

And some states are taking their own steps to make the plans better.  In Massachusetts, for instance, several colleges found a way around hiking premiums: they banded together to form the “Student Health Program Group Purchasing Initiative,” which covers 12,000 state university and community college students. “This is the type of innovative approach that more schools across the country should be looking at,” Smith says.

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    • Not buying insurance because you don’t think you’ll get sick is called “free riding.”

    • It’s all about opportunity cost. Smart people weigh the cost of needing the insurance with not needing it and act accordingly. Do you really hear about college and post-college aged people getting sick?

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