With almost 20 million students enrolled in a college or university in fall 2019, (1) the college medical insurance sector holds ample opportunity for agents and carriers. While these plans share some commonalities with employer-sponsored health plans, there are some subtleties to keep in mind before entering the market.
College-sponsored health plans have long been a fixture at institutions of higher education, which mandate that students have health coverage in order to matriculate. Before the passage of the Affordable Care Act (ACA), these plans often acted as a stop-gap for students not on their parents’ coverage. In the post-ACA landscape, students still enroll in them for a variety of reasons, namely price and geographic network coverage. Though parents’ coverage has extended to their children until the age of 26 as of 2010, the trends towards high-deductible, employer-sponsored plans means that healthcare comes at a higher cost. This relates to the overall trends we’re seeing in the healthcare market, with a healthy few paying a high amount of premium to support an at-risk, older “many.” College-sponsored health plans change the paradigm by writing risk based on their young, low-risk student population. Thus even with the lifting of lifetime maximums mandated by the ACA, college-sponsored plans still offer an attractive price point with a lower deductible in many cases, allowing students (and the families often paying the bill) to access comprehensive but affordable coverage.
Local area coverage is another attractive factor of a college-sponsored plan. A parent’s plan may be workable for in-state students, but for students from out-of-state, a home insurer’s network may not be optimal. By buying coverage from their school, students can often access a more robust and better-established network of providers.
While there are general parameters that widely apply to the college insurance industry, there are nuances to keep in mind when entering this market.
1. National Center for Education Statistics, “Fast facts: Back-to-school statistics,” Aug. 13, 2019.