Watch out: If your health insurance does not meet the requirements set by the college your child attends, you may be forced to buy an entirely new policy sold or sponsored by the college. This potential cost is often omitted from listed expenses of attendance. Here’s how you can get a waiver.
Even though you may have solid health insurance for your family, the policy’s provisions may not meet the requirements set by the college your child attends. That means you may be forced to buy an entirely new policy the college sells or sponsors. At some colleges, the cost of the policy is over $5,000 for the 2019–2020 academic year (see the table below).
The way to avoid this charge is to get a waiver from your college by proving you have a health-insurance plan that’s comparable to the one it sells. The process to do this for the academic year often occurs in July and August or the month before the tuition bills come out.
There is a good reason for colleges’ mandatory health insurance and its stringent requirements. Colleges are understandably concerned that students could face debt from medical expenses that dwarfs even their student-loan debt. And while the cost of mandatory student health insurance is often a big surprise for many families, in some situations the college’s insurance policy can actually present both savings and a better plan. However, colleges need to improve their grade in making students and parents aware of this large mandatory additional expense.
About a month before receiving the bill for my daughter’s freshman year, I received a form email from the college stating that she was automatically enrolled in its student health-insurance plan unless I completed an online application to receive a waiver. The cost of the policy was around $1,500. This cost was not listed in the table the college posted on its website and not part of the cost data that appears in various other websites and books as an expense of attendance for the college.
I’m a financial educator focused on equity compensation (stock options, restricted stock, ESPPs) through the website myStockOptions.com, which even has a section on financial planning for college funding. Thus I’m financially aware and had rigorously saved for my kids’ college education, mostly in 529 Plans. This new and large cost completely shocked and baffled me.
I run a small business and already pay about $12,000 per year for a family plan. I did not see the need to pay for another health plan. While I was able to obtain the waiver and opt out of this additional expense for my daughter’s four years of college, for my son, now at another university, it’s more challenging and complex.
I soon discovered that many colleges have similar requirements. How did I fail to know about this expense? Why are colleges in the business of health insurance?
What I Learned
Your college student will receive healthcare from the student health center on campus as part of the tuition and health-services fee you pay. The health-insurance requirement kicks in for anything beyond the health services the school can provide. Health insurance that would cover emergency care for your child, which for most students would be the only reason they would need additional healthcare, may not meet the requirements the college sets.
The Affordable Care Act (“Obamacare”) allows colleges to sell health insurance and set their own higher standards based on what the school determines its students need. They can make having health insurance comparable to the plan they offer a condition of enrollment. See FAQs from the American College Health Association, other resources on its website from the Student Health Insurance/Benefits Plan Coalition, and a discussion of regulations in the United States Federal Register.
Colleges’ standards dive deep into the minutiae of insurance plans. They are very specific about the insurance features they want students at their location to have before waiving the obligation to buy their plan. In addition, under either federal or state laws, colleges cannot sell short-term or supplemental plans that simply fill the gaps where your health insurance does not meet the college’s requirements.
What It Costs
In the table below is the yearly mandatory health-insurance fee I found on websites at selected colleges, showing a wide range in this cost. Most colleges do not offer a choice of plans or alternative insurers. Plus, these costs rise yearly, even faster than tuition costs. I selected colleges from the West, Midwest, East, and South (two per region). For each region, I selected one larger university and one liberal-arts college.
Colleges Need To Improve Disclosures About This Potential Cost
Below is an example that illustrates how colleges present the requirement on their websites, yet leave the insurance cost out of the main table of college expenses. I selected from the table Northwestern University as an example of a college that does have information on its website about student health insurance in various places, but like other colleges seems to sidestep listing it clearly in a table of its costs of enrollment. (Disclosure: I’m a fellow Big Ten alum from University of Michigan, a college that does not have mandatory health insurance but does offer a student plan.)
The screenshot below is from the webpage that shows the requirement for health insurance ($4,050 in 2019–2020):
Northwestern’s requirement for health insurance ($4,050 in 2019–2020)
The next screenshot shows the webpage with specific provisions that a health plan must have:
Northwestern’s requirements for coverage by a health insurance.
Lastly, this screenshot is from the webpage showing costs of enrollment at Northwestern:
Costs of enrollment at Northwestern. Note that while the health-service fee is listed, the mandatory cost of the student health-insurance plan is not included.
Note that while the health-service fee is listed, the mandatory cost of the student health-insurance plan is not included. It is mentioned separately as a requirement on another page. A common practice at all colleges is that this information does not appear in this type of key table of costs. It’s like leaving a critical question blank that’s worth at least 25% of the points in a final exam.
At a minimum, colleges should voluntarily at least footnote the potential cost of health insurance when they list the health-service fee and the total cost of enrollment. While I do not believe colleges are being deliberately sneaky about selling student health insurance, leaving out this cost is less than totally transparent. After all, colleges do list the cost of books, which (unlike health insurance) they can’t force students to buy; and most students find ways to lower that cost when it comes out of their own pocket (ask my kids for their savvy advice). Therefore, colleges should provide more upfront transparency about the mandatory cost of health insurance and waiver process.
Five Steps Students And Parents Need To Take
1. Once you know what college your child will be attending, be sure you check its requirements for student health insurance to determine whether you may need to pay for its student health plan. You may have time to switch into another plan to meets its standards, hopefully before the open enrollment period for the year in your current plan.
2. Look for a notice by mid-summer from the college stating that the student has been automatically enrolled in its plan, unless you opt out of it by obtaining a waiver and how to do so. This could be an email (or also a colorful postcard, which I receive for my son from Cornell University that has very specific requirements and a $3,108 fee in 2019). It may be sent via a third-party service provider/insurance broker whose website you use to submit the waiver request, such as Gallagher Student Health.
The process is a black box in some ways, unless you’re familiar with very specific provisions in your health plan. You input information about your health insurance without knowing whether or how your plan will qualify. To then receive an email that you “earned” the waiver, your plan needs to provide comparable coverage to what the college sells or sponsors.
Complete and submit the waiver application on time. Do not delay, as you may have to pay a fee for submitting it late and you may experience a backup in any later rounds should your initial waiver request be denied. Even if you do submit it on time, the college may need it earlier than the late-fee deadline. Otherwise, the charge will still appear on your tuition/bursar statement (it then gets credited back).
Alert: You will face an additional college cost unless you apply for and receive the waiver. Colleges should explicitly state this in their communications to students and parents.
3. Should your waiver request at first be denied, as it was for my son from Cornell, contact your health insurer to see whether you can get a letter documenting that your health plan meets the school’s requirements. You want to then resubmit your waiver request with this letter. Should you still be denied, your college will probably have an internal process for submitting a waiver request to someone at the college responsible for student health insurance.
If you have an HMO plan that does not have facilities in the state of your college or any limits in your plan on its out-of-area network, you are likely to face challenges in getting the waiver, as will students with an out-of-state Medicaid plan or a plan that covers only catastrophic illness. International students will almost certainly need to buy the school’s plan. (My own experience and that of others is mentioned near the end of a Boston Globe article: College-bound? The fees could end up being a big surprise.)
4. The tuition/bursar statement will have lines with many fees on it, ranging from the big tuition number to a student activity fee. Look out for a line on your tuition bill/bursar statement that seems like it could be for student health insurance (at Cornell it’s SHP Premium). Do not assume this is just another fee for the college that is part of the already extremely large sum you thought you had to pay for attending it. This is an additional fee that is potentially waivable, even if it was disclosed in a prior communication and you simply didn’t see it or receive the information.
Question your college about this fee before you pay it. I suggest that colleges put an asterisk next to this item on the bursar statement with a footnote stating that this fee is waivable and explaining the process for obtaining a waiver. That would further help prevent the unnecessary payment of this large fee when a student already has health insurance that would qualify.
5. Evaluate whether the student health-insurance plan is actually a good option to consider. For example, when you have a family plan with just one child on it, switching to a plan for a couple (or just yourself if you’re a single parent) and buying the college plan for your student can potentially reduce costs. For students who lack health insurance or have an inadequate plan, these policies offer a comprehensive choice.
As you’re scrambling to pay the upcoming semester’s tuition bill, it can be a big hassle to suddenly switch health insurers for the student, particularly if the school’s policy does not cover the doctors you now use. You would also need to change your own plan after you enrolled in it. However, if it makes financial sense and provides at least similar coverage to what you have, this is a route to at least consider. See articles from Consumer Reports and The New York Times that discuss this approach in evaluating college health insurance.