By: David Bottoms, CFP®, RHU, REBC, Senior Vice President, Benefits at The Bottoms Group • 770-425-9989
College health care plans were largely unaffected by the health care reform, the Affordable Care Act, passed in March, because student plans for the 2010-2011 school year were negotiated before September 23, when many of the regulations take effect. Most college-sponsored plans have low maximum benefit ceilings, pretty hefty exclusions for pre-existing conditions and limited prescription drug coverage.
With school-sponsored plans exempt from many of the provisions in the bill, we suggest if you have access to an employer-sponsored plan, it is advisable to keep your college student as a dependent on your plan. Generally employer-sponsored plans will have four tiers: employee only; employee and spouse; employee and dependent, and employee, spouse and dependent. If you have a family with multiple children, it is usually a safe bet to consider the family option with your employer-sponsored plan. Most plans will not require an additional premium for a college student.
Health care reform generally affected employer plans with renewal dates after September 23, 2010. One of the key provisions in the legislation was increasing dependent eligibility to age 26. Prior to the reform, college students were required to be enrolled at least part-time and had to be enrolled in an undergraduate program. Now with the eligibility limit increased to age 26, dependents no longer have to be students. The law also benefits students who take more than four years to complete a degree and graduate students.
Typically, college health care centers will accept outside insurance, but it is prudent to confirm before there is an emergency. It is important to note; however, that your insurance carrier may consider the college health care center out-of-network. Parents and students should be able to check these details before the student is enrolled.
If your college student is attending school out-of-state, you may want to check if your employer plan will allow you to move your dependent to a preferred provider organization (PPO) network. Generally, PPO plans have larger networks of doctors and care facilities, thus increasing your chances your student will have access to in-network coverage.
If you are older than 26 and returning to school, your best option is to first consider the health plan offered by the college. You should carefully consider the plan’s maximum policy benefits, covered procedures, excluded conditions and prescription drug coverage. If it will not fit your needs, a student can shop for an individual policy on the Internet, such as www.ehealthinsurance.com. However, many individual plans have onerous pre-existing condition exclusions until new laws go into effect in 2014. It is extremely important to read the fine print when considering an individual plan.
One buzzword you may see when shopping for insurance is loss ratio. The loss ratio is the percentage of every dollar in premium that is paid that is used on approved medical care. The Healthcare Reform Bill specifies that insurance carriers must spend at least 80% of every dollar on coverage, leaving 20% for administrative costs for the carrier.
In the past, loss ratios were considered the secret formula for an insurance carrier; however, with the new laws, loss ratios are becoming more public. When considering coverage, you generally want a carrier that has a higher loss ratio as it is an indicator that the plans offer better benefits.
Disclosures
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
