College students and health care coverage: Know your options

College students around the country are always grappling with exciting questions: What classes am I going to take? What should I major in?  Which college events should I attend?

There is another important question that may not be at the top of that list: What kind of health coverage should I get?

For many young adults, especially those out on their own for the first time, the question of health care coverage is far from the top of the list. But new rules and opportunities under the Affordable Care Act (ACA) mean every young adult should explore the range of new health coverage opportunities – and obligations – under the new law, and make informed decisions about their health coverage.

Under the ACA, often referred to as Obamacare, almost everyone must have health insurance coverage of some kind. This includes the estimated 11.2 million students in America’s two- and four-year colleges, as well as those enrolled in online college programs.

There are a variety of options for health coverage. Obtaining coverage through school, staying on a parent’s health plan, or buying an individual plan are among the options available to many students.  But figuring out which option makes the most health and economic sense can be tricky.

Student Health Insurance Plan (SHIP)

Many universities and colleges offer their own health plan, called a Student Health Insurance Plan (SHIP). Four-year schools are more likely to offer SHIPs than two-year schools, and the coverage is often included in the regular schedule of tuition and fees you pay at the beginning of a new semester. Most schools enroll students into their SHIP and require that students opt-out if they want to get coverage elsewhere. On many campuses, the SHIP automatically covers services at the college’s health clinic.

If a student is covered by their school’s student health plan, in most cases they are considered covered under the ACA and they won’t have to pay the tax penalty that people without coverage must pay. Students should check with their student health plan to see if it qualifies as coverage under the health law.

Even with access to a student health plan, students can choose to buy a health plan through the health coverage marketplace, or health insurance Exchange, instead. They may qualify for lower cost plans with discounts based on income.

Parents’ Health Plan

Or, students may be able to stay on their parents’ health insurance plan. Under the Affordable Care Act, children may stay on a parent’s health plan until age 26. Children can join or remain on a parent's plan even if they are married, not living with their parent, or no longer financially dependent on their parent.

Out of State Students

But there are important considerations when weighing these options. This is particularly true for students who go to school in a state other than the one where their parents live.

Most health plans have limited networks of doctors and other medical providers authorized to provide health services. If a student lives in a different state from his or her parents, visits to the doctor could be out-of-network, and be dramatically more expensive than if a student were to buy his or her own plan in the state where they are attending school.

Traditional Health Market

Students can always purchase health insurance in the traditional individual insurance market – through a broker or directly from the health insurer.  Similarly, the student is free to take coverage from their employer if they work full- or part-time.

There is no rule against having more than one health plan, and plans can work together to reduce out-of-pocket expenses.

As mentioned above, students could qualify for discounts to help pay for their own plan if purchased through the health insurance marketplace or Exchange. But in order to qualify for lower costs on an insurance plan based on income, students must file their own tax return for the year of the coverage.

Medicaid Coverage

Another option is Medicaid, the federal and state insurance program for low-income citizens. Some states are expanding Medicaid to cover all adults below a certain income level. The availability of Medicaid coverage, and eligibility requirements, varies from state to state (the name for this coverage may be different in your state).   Find out whether your state is expanding Medicaid and what your options are.

Navigating the new waters of health coverage can be tricky, and it may take some time to figure out which is the best option for you. For more information, you can check our Web site at www.TransamericaCenterforHealthStudies.org or at www.healthcare.gov.