Health Care 101 for college students

Each year, college students face a critical test that they probably don't hear about in any classroom: having the right health insurance to cover the costs of ailments and emergencies that may arise while they're in school.

Thanks to the Affordable Care Act, the health reform legislation more often known by the moniker "Obamacare," students now have at least a half-dozen health care choices.

"Five years ago, a student had very few options," says Jenny Haubenreiser, immediate past president of the American College Health Association. "Now, they have many options."

Poor health may be the last thing on the minds of young, vibrant college students. But it pays to think about illness before it happens.

"We cannot overestimate the importance of insuring the young adult population," says Haubenreiser, who is now the director of health promotion at Montana State University. "There's this idea they are young and invincible. But they need care just like anyone else."

Following are six ways college students can answer the question: What do I do about health insurance?

Stay on your parents' plan

Thanks to health care reform, students under the age of 26 can remain on their parents' health insurance.

College life can add a few wrinkles to this Obamacare provision, however. For example, if a student is going to school in a different state, it's important to contact the insurance company to make sure there will be in-network providers near campus.

Large insurers often do have affiliated networks in other states, but parents need to check with their particular plan, says Cheryl Fish-Parcham, deputy director of health policy for the health care consumer group Families USA.

"Students might also want to schedule routine preventive care visits while they are at home on vacation in order to have access to the network of their parents' plan," she says.

Plus, parents and students should find out how the insurer will reimburse emergency care claims in the college town.

The possible absence of in-network coverage can create extra expenses for students and force them into making difficult choices, Haubenreiser says.

"If something comes up and they have to leave to get care for a longer-term illness, that will essentially take them out of school," she says.

Sign up for a health plan at your school

Many colleges offer their own health plans to students. A college may work with an insurance company, which pays any claims. Or, plans may be self-insured by the school, which makes the payouts directly.

College health plans have a major advantage over other health insurance options because the premium costs are grouped with other higher education expenses, such as tuition and room and board, Haubenreiser says. "So, your student loans can assist with that."

These plans often appeal to older students no longer eligible to remain on their parents' health insurance, she says.

"These plans will also cover services that are often needed by young women for their reproductive health," adds Fish-Parcham.

But school plans may not always be the best option for students.

"These plans may have much more limited coverage than other individual insurance," Fish-Parcham says. For example, they may not pay for injuries to a student who got hurt while intoxicated.

She urges students and parents to examine student health plans carefully because there may be yearly limits on claims or doctor visits.

Things should improve in 2014, when these plans must drop annual coverage dollar limits to comply with Obamacare, Fish-Parcham says.

Buy subsidized Obamacare coverage

Buy subsidized Obamacare coverage © Ellen McKnight/Shutterstock.com
Americans now have the opportunity to shop for health insurance on Obamacare's new health insurance exchanges, or online marketplaces.

Buying a policy through your state's exchange can make sense if your budget is tight, says Jen Mishory, deputy director of Young Invincibles, a nonprofit that specializes in economic issues facing young Americans.

She explains that people using the marketplaces can qualify for tax credits to reduce their monthly insurance premiums. You're eligible if your household income is up to 400% of the federal poverty level and you meet other criteria, such as not being able to get affordable coverage through an employer.

"Depending on your income, it could be an enormous discount," Mishory says.

Exchange shoppers -- including college students without other options -- can purchase comprehensive health insurance coverage that goes into effect as early as January.

Haubenreiser is concerned that students who shop on exchanges may not make the wisest decisions. "The young adult is going to go for price point over quality or the benefits provided," she says.

Purchase 'catastrophic' coverage

In the exchanges, Americans under 30 have the option of purchasing "catastrophic" health plans with lower premiums and high deductibles.

"This will be very attractive to the young population," Haubenreiser says.

While initial preventive care visits are covered at no charge, these plans come with deductibles of more than $6,000. Haubenreiser worries that one serious accident or unexpected disease diagnosis could lead to a real out-of-pocket hardship for a student.

"Six-thousand dollars can derail a student's career pretty quickly," she says.

She also fears that students with high deductibles may be reluctant to go to the doctor. "They won't get the care, and they'll wait until they are really sick."

Before springing for catastrophic coverage, Mishory suggests comparing the plans with more comprehensive exchange policies that may offer you a discount.

"You cannot use tax credits to buy catastrophic plans," she says. "So, if you are low or moderate income, you definitely want to check to see whether you quality for monthly tax credits to reduce your premiums."

Apply for health insurance through Medicaid

Students from low-income families may be able to apply for coverage through Medicaid, the federal-state program providing health insurance to poor Americans.

In the past, Medicaid coverage was limited to narrow populations, including children and pregnant women. As part of health insurance reform, states now have the option of expanding Medicaid eligibility.

Students under 65 years of age in participating states may enroll if they earn up to 133% of the federal poverty level.

"If you are a dependent on your parents' tax return, your eligibility will depend on your (family's) household income," Mishory says.

However, many students do not have Medicaid as an option, says Robin Gelburd, president of FAIR Health, a nonprofit focused on providing information about health insurance and health care costs.

"Only half the states are choosing to expand their Medicaid programs," Gelburd says.

Coverage is available nationwide for students who were on Medicaid while in foster care but are aging out of that system, Fish-Parcham notes.

"New rules permit former foster children to keep Medicaid until age 26," she says.

Skip health insurance altogether?

The vast majority of Americans will be required by law to carry health insurance beginning in 2014. However, there are exceptions to the rule, including members of Indian tribes and members of some religious groups.

Some college students are likely to fall into another category that has been granted an exemption, Gelburd says.

Health reform rules state that the insurance mandate does not apply to people who do not earn enough money to file income taxes. Right now, that means making under $10,000 for a single person under age 65, Gelburd says.

"Many full-time students will not be earning enough to trigger the (Affordable Care Act's) requirement to have health insurance," she says.

Of course, a decision to skip coverage altogether is not to be made lightly.

"Students will need to evaluate the benefits of the security that the insurance provides for unanticipated medical expenses against the cost of the coverage," Gelburd says.