Let’s just say it’s complicated.
As many provisions of the Patient Protection and Affordable Care Act — or, Obamacare — come into effect on Jan. 1, the University and its students are preparing for potential changes to health coverage.
One of the more popular aspects of the landmark legislation is the requirement that parental health benefits be extended to children until the age of 26. Conversely, individuals without health coverage will face increasingly steep penalties for remaining uninsured.
“I don’t think students, for the most part, need to know a lot of the details,” Public Health prof. Richard Hirth, an expert on the law, said. “However, I think they do need to know what their options are.”
In 2014 and beyond, students will be provided with three primary ways to obtain their health insurance: through family, the University or the new exchanges that the law calls on states to set up. Previously, most insurance plans would only cover children until age 22.
For students wishing to receive health insurance through the University, the existing domestic student health insurance plan will remain in effect. This plan is predicted to meet the minimum coverage requirements laid out under the new law, Hirth said.
In October, the U.S. Department of Health and Human Services will open the new insurance marketplace, commonly called healthcare exchanges, which will allow uninsured or underinsured individuals to shop for and purchase health insurance from one of many partner companies. Michigan was the 25th state to pass legislation. While this is one of the new features of the Patient Protection and Affordable Care Act, Hirth said it will not be as attractive to most students.
Exchange plans are limited in how much they can vary premiums — the amount a person is charged with up-front for coverage. While some plans are allowed to charge younger people less, the lower cost still overvalues the real cost of coverage for the younger — and generally healthier — population.
“You’re essentially going to be paying a premium that’s subsidizing the 63-year-olds on the plan,” Hirth said.
In contrast, the student plan groups its members into an independent risk pool, meaning student premiums only need to support other students, not elderly populations.
However, students can only maintain insurance through the University while enrolled, meaning many must obtain their own insurance upon graduation. The exchanges will likely be a main resource for students to maintain health insurance coverage if they do not already have coverage through their family.
“At that point I think it is useful for people to know about their exchanges and the types of plans that are available,” Hirth said. “Because once they leave the student plan, that’s probably where they’re going to go.”
The new law eliminates the annual coverage cap previously seen in many insurance plans. In the past, very few students have exceeded the $1 million cap provided under the University plan. Other universities with lower caps — some between $100,000 and $200,000 — will be more affected by this change, Hirth said.
Individuals who fail to obtain health insurance after Jan. 1 will face new penalties. For 2014, the penalty is set at the greater of $95 per adult or 1 percent of taxable income, according to the Michigan Department of Insurance and Financial Services. However, the penalty grows to $325 or 2 percent of income in 2015 and $695 or 2.5 percent of income in 2016.
Laurie Burchett, the University’s student insurance manager, said the new law is still unclear — especially regarding the exchanges — to many healthcare providers and individuals around the nation.
“There are a lot of unknowns, and you can’t really go (to the exchange) right now to take a look at what is available,” Burchett said.
According to Burchett, students on the University’s domestic health insurance plan will be covered nationwide, while those on a parent’s plan may only be covered for emergency medical needs while away from their area of residence.
For students with limited local coverage, University Health Service offers many medical services to students, such as clinic visits, most laboratory tests and nutrition counseling, the cost of which is covered by the student health service fee and is included in tuition.
Asked about changes in healthcare coverage on campus, many students declined to comment, citing little or no knowledge of the changes. LSA freshman Brady Reeves said health care is not an issue that he has ever heard about on campus, and that few students concern themselves with intricacies of the new laws.
“I feel it’s not really that talked about,” Reeves said. “I don’t really worry about it because I know my parents have good health insurance.”
Receiving coverage through his parents, LSA sophomore Francis Buggia said he does not expect his health care to change in the coming months.
“There’s probably good information out there,” Buggia said. “But there’s a lot of hearsay too — a lot of uninformed people telling other people what isn’t necessarily true.”