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Health care reform rule gives incentive for colleges to self-fund student plans

Health care reform rule gives incentive for colleges to self-fund student plans

WASHINGTON—A final federal health care reform rule gives colleges and universities offering coverage to students an incentive to self-fund those arrangements, experts say.

In that final rule, the Centers for Medicare and Medicaid Services said this month that student health insurance policies must provide annual coverage limits of at least of at least $100,000 for essential benefits for plan years that begin July 1 through Sept. 22 this year.

Then for plan years that begin on or after Sept. 23 but before Jan. 1, 2014, student health insurance policies must provide at least $500,000 in annual coverage limits for essential benefits.

Beginning Jan. 1, 2014, all health care plans are not allowed to have annual dollar limits due to the health care reform law.

In the final rule, though, CMS said it lacks the regulatory authority to impose annual limits on self-funded student plans.

While the Public Health Service Act and the Patient Protection and Affordable Care Act give federal regulators authority over “health insurance issuers in the group and individual markets and over nonfederal governmental group health plans…self-funded student plans do not fit into these categories,” CMS said.

About 10% of students enrolled in plans offered by colleges and universities are covered by self-funded plans, according to a 2010 study by Buck Consultants L.L.C., Hodgkins Beckley Consulting L.L.C. and Stephen Beckley & Associates Inc.

To avoid such mandates, “We could see self-funding grow,” said Rich Stover, a Buck Consultants principal in Secaucus, N.J. In some cases, though, states would have to pass legislation before academic institutions could self-fund, Mr. Stover added.