The Impact of the Affordable Care Act

The Affordable Care Act  (ACA) will have a substantial impact on the decisions that college and university administrators must make in regard to their on campus student health insurance program.

Students attending the nation’s colleges and universities will have several new options for health insurance to consider. Typically, students were either insured as a dependent on their parent’s plan or were enrolled in an institution-sponsored plan. With the ACA, students now have several new options under one of the various state exchanges or the federal exchange. (The list of exchanges by state can be found by clicking here). Potential options include: (1) an unsubsidized individual plan, (2) a subsidized plan with eligibility based on family income, and (3) a catastrophic plan which is a high deductible plan for individuals but limited, with some exceptions, to those under age 30.

Extended Dependent Coverage to Age 26

Under the ACA, students now have the opportunity to stay on their parent’s plan until age 26 (Previously, this requirement varied from state to state). This rule has been in place since 2010 so it is expected to have little impact in enrollment from year to year. One important effect of the age 26 rule is the response by employers to the ACA requirement that they cover dependents until age 26. While the ACA requires an employer to offer dependent coverage until age 26 if dependent coverage is offered in the plan, it does not require the same level of company contribution to the dependent’s coverage as to the employee’s coverage. There have been early signs that employers may decrease or eliminate the company’s contribution for dependents in order to better control their own health care spending. If this occurs, the institution-sponsored plan could likely be the lowest cost alternative although students and parents will need to compare all options.

 

Expanded Medicaid Coverage

Another new option for students may be eligibility for expanded Medicaid coverage. Under the ACA, students with family incomes below 133% of the federal poverty level are now eligible for Medicaid. The U.S. Supreme Court later ruled that the Medicaid expansion is voluntary with states. As a result, some states are not expanding their Medicaid programs as of January 1, 2014. For states that have voluntarily agreed to expand Medicaid, the minimum income levels below which an individual or family may be Medicaid eligible (assuming other state and federal eligibility requirements are met) are the following:

 

# of People in Household

133% of 2013 Federal Poverty Level

1

$15,281

2

$20,628

3

$25,975

4

$31,322

5

$36,668

States may have higher income cutoffs. For states that have chosen not to expand Medicaid at this time, the qualifying income levels vary by state but could be substantially lower than the income levels in the table above. An up-to-date list of each state’s Medicaid expansion status can be found by clicking here.

Subsidized Plans Under the Affordable Care Act

The Affordable Care Act also provides a subsidy for healthcare coverage if the family’s income is less than 400% of the federal poverty level but does not qualify for Medicaid. These subsidies are based on a rather complicated formula that takes into account family income level and the 2nd lowest priced silver plan on the appropriate federal or state health care exchange. Generally, a family will qualify for a federal subsidy if total income is less than what is shown in the table below:

# of People in Household*

400% of 2013 Federal Poverty Level

1

$  45,960

2

$  62,040

3

$  78,120

4

$  94,200

5

$110,280

*Add $16,080 for each additional person in the household - Alaska and Hawaii figures are higher

To help determine if your family qualifies for a subsidy under the ACA, click here to see an excellent subsidy tool provided by The Henry J. Kaiser Family Foundation. Please note that some states may have additional state subsidies available.

Catastrophic Plans

The ACA created a special category of plans for individuals under the age of 30 or who may not be able to afford the minimum level of benefits required of other plans under the law or otherwise qualify for a "hardship exemption". These plans are generally called Catastrophic Plans and do not cover any benefits except for three primary care visits and specified preventive care until a deductible of $6,350 or family deductible of $12,700 has been met. Prescription drug coverage is also subject to the $6,350 deductible under Catastrophic Plans. Under most university-sponsored plans, prescriptions do not fall under the deductible so a student’s share of a prescription’s  cost is limited to co-payments generally ranging from $5 to $45. Under Catastrophic Plans, non-preventive prescriptions are not covered until the student satisfies the $6,350 deductible.

Many colleges and universities that require health insurance as a condition of enrollment will not accept Catastrophic Plans as comparable coverage under the concern that the $6,350 deductible represents an inappropriate barrier to care. The good news is that because university plans cover only students rather than a mixed age population, an institution’s plan that is comprehensive and with a deductible level that is appropriate for college and university students could well be at a substantially lower price than Catastrophic Plans.

In Summary

University administrators may find the need to provide guidance to students and parents who may not be familiar with the details of the ACA. A decision that in the past was generally limited to remaining on a parental plan or enrolling in the institution-sponsored plan has become substantially more complex under the new ACA framework. With education as a primary mission, colleges and universities are uniquely qualified to deliver this guidance at the time that students are required to choose a health insurance alternative. Christie Student Health has created a variety of innovative tools that will aid both administrators and students navigate this new environment and make informed decisions.