College-Sponsored Health Plans Overhauled

February 16, 2011

Proposed regulations by the Department of Health and Human Services (HHS) could increase costs and jeopardize the ability of colleges and universities to continue offering affordable health insurance to their students. Should the proposed rules become a reality, institutions may need to modify their policies quickly.

Last week, HHS proposed regulations that would establish rules for student health insurance covered under the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (collectively, ACA). The proposed regulations come on the heels of an investigation by the New York Attorney General (NYAG). In April 2010, the NYAG released findings that concluded that some college-sponsored plans were inadequate and offered extremely limited coverage.

The HHS rules essentially mirror the NYAG’s concerns. For example, under the proposed regulations, which would take effect Jan. 1, 2012, college-sponsored plans would prohibit exclusions based on pre-existing conditions; there would be no lifetime caps on coverage; and annual coverage caps would be increased to at least $100,000 for plans in effect before Sept. 23, 2012, and $2 million thereafter. In addition, the regulations discussed whether to mandate that “loss ratios” (percentage of what insurers receive in premiums v. what they pay out in benefits) be increased to 80%.

The McGuireWoods LLP Higher Education and Healthcare teams are monitoring the comment period, which is set to close on April 12, 2011, and can provide counsel as the proposed regulations become finalized.

McGuireWoods Higher Education Practice

Our higher education attorneys represent public and private colleges and universities. This representation includes statutory and regulatory compliance and investigation work relating to the Higher Education Act of 1965 and the federal student aid programs, as well as issues relating to NCAA investigations, faculty tenure, financing expansion, low-income housing, 501(c)(3) and other tax issues, student lending compliance and investigations, intellectual property, students and academics, housing, governance, endowment management, and construction.

McGuireWoods’ Healthcare Group

McGuireWoods offers an experienced team of more than 50 lawyers well versed in serving the needs of the healthcare, pharmaceutical, life sciences and medical device sectors. We understand the daunting array of legal and business issues our clients face and we work tirelessly to find effective solutions to their daily challenges. Please click here for a link to our full Healthcare description online.