Final HHS Rules for Student Health Plans Include Phase-In of Annual Limit Requirement | Practical Law

Final HHS Rules for Student Health Plans Include Phase-In of Annual Limit Requirement | Practical Law

The Department of Health and Human Services (HHS) finalized regulations addressing how the Affordable Care Act (ACA) applies to student health insurance coverage. The regulations include a phase-in for the ACA's annual limit requirements and an amendment reflecting the medical loss ratio rules.

Final HHS Rules for Student Health Plans Include Phase-In of Annual Limit Requirement

by PLC Employee Benefits & Executive Compensation
Published on 19 Mar 2012 • USA (National/Federal)
The Department of Health and Human Services (HHS) finalized regulations addressing how the Affordable Care Act (ACA) applies to student health insurance coverage. The regulations include a phase-in for the ACA's annual limit requirements and an amendment reflecting the medical loss ratio rules.
HHS finalized proposed regulations issued in February 2011 that address how the Affordable Care Act (ACA) applies to student health insurance coverage. Although most college and university students have health coverage through traditional employer-sponsored plans, government statistics indicate that a small percentage of students are covered through other private insurance, including student health plans. The final regulations:
  • Define student health insurance coverage as a type of individual health coverage provided:
    • under a written agreement between a health insurer and a college or university; and
    • to students of the college or university and their dependents.
  • Provide that certain ACA requirements do not apply to student health insurance coverage.
The final regulations include the following provisions, some of which revise the proposed regulations:
  • Lifetime and annual dollar limits. The final regulations modify the proposed rules to give student health plans more time to comply with ACA requirements regarding lifetime and annual limits (see Practice Note, Lifetime Limits, Annual Limits, and Essential Health Benefits Under the ACA). The final regulations include the following restrictions on annual dollar limits for essential health benefits:
    • for policy years beginning on or after July 1, 2012, but before September 23, 2012, insurers may not offer student health insurance coverage with an annual dollar limit that is less than $100,000;
    • for policy years beginning on or after September 23, 2012, but before January 1, 2014, insurers may not offer student health insurance coverage with an annual dollar limit that is less than $500,000; and
    • no annual dollar limits are permitted for policy years beginning on or after January 1, 2014.
    If a policy does not meet the annual limit restrictions, insurers must provide students a notice informing them of this fact and other information, including:
    • the dollar amount of the annual limit; and
    • a description of the plan benefit to which the limit applies.
    The regulations include model language for this purpose, which was revised in several respects from the version in the proposed regulations.
  • Preventive health services. Under the final regulations:
    • student health plans must provide coverage for preventive health services as required by the ACA and its implementing regulations (see Practice Note, Coverage of Preventive Health Services Under the ACA);
    • insurers can coordinate with student health centers to serve as an in-network provider where students receive preventive services without cost-sharing; and
    • student administrative health fees are not considered cost-sharing for purposes of the ACA's preventive services requirements, which prohibit cost-sharing for preventive services.
    HHS also emphasized that certain non-profit colleges and universities with religious objections to providing contraceptive services under a student health plan may be able to use HHS’ temporary enforcement safe harbor regarding these services (see Legal Update, HHS Guidance on Contraceptives Establishes Temporary Safe Harbor for Religious Organizations).
  • Choice of provider. The final regulations do not include an exception from the ACA's choice of provider requirements for student health insurance coverage (see Practice Note, Patient Protections Under the ACA). However, student health plans can:
    • designate providers at a student health center as the plan's in-network providers; and
    • allow students to choose among those providers, if the centers have sufficient provider capacity and range of available services.
  • Short-term limited duration coverage. The ACA's individual market protections do not apply to short-term limited duration coverage (that is, coverage for less than 12 months). According to HHS, however, this exception does not apply to student health insurance coverage with the same insurer for one or more years during the student’s undergraduate or graduate education.
  • Grandfathered plans. The final regulations do not contain an exception from the ACA's grandfathered plan rules for student health insurance coverage (see Practice Note, Grandfathered Health Plans Under the ACA). Any coverage in which a student is newly enrolled after March 23, 2010, is not grandfathered.
  • Self-funded plans. In the preamble to the final regulations, HHS acknowledged that it lacks authority to regulate self-funded student health plans but noted that these plans can be regulated by the state.
  • MLR rebates. The ACA's medical loss ratio (MLR) rules generally require insurers to provide rebates to enrollees if the percentage of an insurer's spending for policyholders on health care claims and quality improvement versus premiums charged does not satisfy certain percentages (see Legal Update, Guidance on Plan Asset Implications of Medical Loss Ratio Rebates). The final regulations include an amendment that makes insurers of student health insurance coverage subject to the individual reporting and rebate requirements of the MLR rules, subject to:
    • a phase-in of certain MLR standards for 2013; and
    • exceptions that include separate reporting of student health insurance coverage.

Practical Impact

Many of the accommodations included in the final regulations reflect the unique nature of student health plans, which include more frequent enrollment periods and the transient nature of student populations. Notably, under an additional ACA rule that requires group health plans and insurers to offer coverage for certain categories of children until age 26, students may also be eligible for coverage under their parents' employer group health plan, which may reflect all the ACA requirements, including the annual dollar limit requirements (for more information, see Practice Note, Coverage for Adult Children to Age 26 Under the ACA).