Insurers responded to this requirement by slightly raising their prices. According to the Commonwealth Fund, the under-26 rule led to a 0.9 percent increase in group plan premiums last year. In addition, some insurers have changed their pricing structure, which is likely to lead to higher costs for families.
College health plans, which often kept prices down by offering skimpy benefits, are also expected to become more costly as they accommodate the benefit requirements of the health law. A few schools have had their prices rise so much that they have decided to drop their health plans altogether.
These changes complicate insurance shopping for students and their parents. Just as prices vary, sometimes sharply, so do benefits. “As premiums go up in all [insurance] markets, people are going to need to look at all their options,” said Kevin Lucia, a researcher at Georgetown University’s Health Policy Institute. Aside from parent and college health plans, students can purchase an individual plan, but that’s done only rarely.
Student plans work much like other forms of health insurance, with services often available on and off campus.
Starting this year, the health law requires many student plans to meet most of the standards applied to policies sold by insurers to individuals, including coverage of a set of preventive services without a co-pay and a phased-in ban on annual dollar limits, which many plans previously used to keep prices down.
Many plans that provide limited coverage are raising their premiums as much as 50 percent to comply with the new law’s requirements for coverage, according to Stephen Beckley, a student insurance consultant and co-organizer of the Lookout Mountain Group, an organization of college health professionals. Right now, prices of those skimpy plans are typically $400 to $620 per year.
In contrast, plans with more generous benefits are increasing their premiums less than 3 percent in some cases, Beckley said. Typically, these plans cost $1,700 to $1,900.
The health law regulations bolster student plans, Beckley and others agreed, but they don’t necessarily provide excellent coverage.
“Compared to what some students experienced before with student plans, these are better protections,” said Sara Collins, a vice president of the Commonwealth Fund. But many plans still have low lifetime dollar limits, and some of the 2010 law’s requirements won’t take full effect for a couple more years, she added. In the interim, plans that don’t comply fully need only provide a written notice to potential purchasers.