Student Health Insurance - a fresh approach for 2009

Kim Morris | June 22, 2009

Students often wonder if they really need health insurance. It seems like a reasonable question when you are young and healthy and seemingly invincible. After all, almost everyone who knows how to access the health care system is provided with basic health care services and acute care (like emergency care) in the United States, regardless of whether or not they have health insurance. Young adults tend to use health care services less often than any other group. Still, with medical costs growing as fast as ever, even a small medical need can trigger a large financial crisis for a student and her family.

The need for insurance comes becomes more obvious when we consider the abilty to access more extensive types of health care. The ability of a patient to gain immediate access to top-quality medical facilities for the most serious types of health care - transplants, extended hospital care, physical rehabilitation, and long term outpatient care - depends almost exclusivley on whether the patient has adequate health insurance. A simple attack of appendicitis could easily wind up costing more than $25,000. Even an affluent family will have difficulty arranging adequate medical care without insurance coverage. Unfortunately, if you wait until you need this type of care it will be difficult or impossible to buy health insurance that covers these items. Often the most immediate insurance concern for young people is the fact that most colleges, trade schools, internship programs, sports teams, community-sponsored travel opportunities and many other activities require health insurance as an admission requirement. Without health insurance, you do not pass "go". So there is usually no question about it - most young people with ambitions to advance their education need to have some type of health insurance.

Coverage Options

There are many types of health insurance plans available to young adults. The most popular plans are listed below.

Parent's Policy - Most students continue to be covered under a parent's policy. If this option is available, it is often the best choice for primary major medical coverage. But these policies typically have high out-of-pocket costs due to deductibles and co-payments, especially for a student attending college away from the parent's area of residents. In this case, supplemental insurance is increasingly used to cover the bulk of student medical expenses.

Employer Group Coverage - Most employers provide health insurance to their full time employees and pay for most of the cost of this employee benefit. This is called group health coverage. This benefit is completely under the control of the employer. Many people do not realize that there is no requirement for an employer to provide this benefit. Most group health plans require that new employees wait a few months before becoming eligible for coverage. The primary advantage of employer group insurance is that coverage is offered on a guaranteed basis to employees and their dependents without regard to prior health history. Fortunately, more of these universal health insurance plans are now available to individuals outside of employer-provided health plans.

School-Sponsored Coverage - These are usually uninsured managed care arrangements to provide care to students in the local area of the college or university. MedSave.com is currently compiling reviews of these U.S. college-sponsored health insurance plans. See: Michigan State University, Pennsylvania State University, Ohio State University, Texas A&M State University, University of Central Florida, University of Texas, University of Minnesota, University of Wisconsin. Stay tuned for more reviews to follow!

Student Medical Insurance - These are privately insured major medical policies designed specifically for students. These are portable and offer coverage to the student in any location in the U.S. These plans also cover graduate students, and are available regardless of age or health. In most parts of the U.S., students can buy a high quality health insurance plan for less than $70 per month at Medsave.com. The published list of tips for buying student medical insurance can be helpful.

Short Term Medical Policies- Interim or gap insurance policies are available to cover from one to 12 months. This coverage is inexpensive and easy to obtain online in most states. The quality of the coverage is excellent except that it does not cover pre-existing conditions. These provide coverage in the U.S. only although other types of polices are available designed specifically for international travel.

Individual Major Medical Health Insurance - Permanent health insurance policies that you buy directly from an insurance company offer excellent coverage, strongest financial guarantees, and the most stability. These individual health insurance policies often provide worldwide coverage. But all this comes at a higher price and coverage is issued for a minimum of 12 months.

Travel Coverage / International Policies - Students planning overseas travel should purchase a separate medical insurance plan for the time that they are traveling, since most student health plans do not cover charges incurred outside of the U.S. These policies are specifically designed to pay for medical expenses and deal with the other international complications (language, currency and business issues) typically incurred while obtaining medical treatment overseas.

Terms to Know

An understanding of these common insurance terms will help with the evaluation of insurance options:

"Deductible or Co-payment" - this is the portion of the bill that you pay before the insurance comes into play. These help reduce the cost of the insurance.

"HMO" - stands for "health maintenance organization". The HMO may pay to keep you healthy, rather than only cover problems hen things go wrong. HMOs tend to be popular among young healthy people, but criticized by people receiving more serious medical care. Private physicians tend to feel that they lose control over the quality of a pateint's care when an HMO is involved.

"Indemnity plan" - means that the policy reimburses you for any ordinary and necessary medical expenses. This is the least restrictive type of coverage but also the most expensive.

"Managed Care" - this means that the insurer has some authority to influence the type of health care you are provided. This cuts health care costs but may also limit your treatment.

"Pre-existing condition" - a medical situation that started before your insurance policy that may not be covered by the health insurance policy.

"Premium" - the cost of the policy, usually ranging from $25 to over $200 monthly.

"Tax-deductible" - reduces your taxable income and thereby reduces your total tax due at the end of the year. Most health insurance is not tax deductible by individuals.

"Tax-free" - the benefit provided by health insurance is usually tax-free. This means the value of the coverage received as well as any cash benefit paid as the result of a claim.

"Underwritten" - this means that not everyone will be accepted because acceptance is based on individual medical history. The insurance company reviews each application and selects the healthiest applicants for enrollment. Premium rates are lower for those accepted, but these plans offer no solution for people with pre-existing health conditions.

As an increasing number of colleges and universities require student health insurance as a condition of enrollment, most healthy students will find affordable high quality coverage through the many options offered online. The cost is likely to be less than $100 per month over the next several years. Young adults with ongoing health issues will be allowed to remain on parents' policies until their late 20s under new or proposed laws. All students should consider supplemental insurance to fill that gaps that the future generation of major medical policies will not cover.

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