UC Student Health Plan Slips Through Loophole in Affordable Care Act

A UC Berkeley student discovered the limits of his UC student health coverage after a cancer diagnosis.(Studio H (Chris)/Flickr)

A UC Berkeley student discovered the limits of his UC student health coverage after a cancer diagnosis.(Studio H (Chris)/Flickr)

If you are a student at any of the UC campuses — or a family member of one — you might want to pay close attention to the case of Kenya Wheeler at UC Berkeley. A year ago he was “healthy as a horse,” the San Francisco Chronicle reports and biked to school every day.

But everything changed when he was diagnosed with cancer. He had health insurance through the UC Student Health Plan. But as medical bills mounted, he closed in on the $400,000 lifetime cap of the policy — caps that were made illegal under the Affordable Care Act.

Illegal, that is, except for self-funded college health insurance plans, such as the one UC has. In its self-funded plan, UC bears the financial risk of medical coverage. From the Chronicle:

Universities have long offered student health coverage to make sure their students have access to health care. Most college health plans purchase a group policy from a health insurance company and must adhere to the new federal requirements.

But some large universities – an estimated 30 universities and systems covering some 300,000 students nationwide – prefer self-funded health plans because they provide more control over policy terms, offer lower taxes and let schools keep funds until it’s time to pay a claim. Similar self-funded plans are offered by corporations and other large businesses, but they are subject to the new federal regulations.

It’s not clear why self-funded student policies were left out of the law, but federal health officials indicated last year they did not believe they had the legal authority to regulate this type of plan.

Nonetheless, starting Jan. 1, the federal law will require Americans – including students – to have health insurance that meets certain minimum requirements or face penalties.

Meanwhile, UC and other universities, including Harvard, have asked federal health officials to add self-funded student health plans to the new law, in which case UC would be required to lift the caps, said Grace Crickette, UC’s chief risk officer. Asked why, Crickette said it was to benefit students, who might otherwise suffer tax penalties.

“We don’t know if we’ll get in,” she said. “We might be rejected.”

UC students have started a petition drive, demanding that UC lift the lifetime cap immediately, the Chronicle says:

UC officials say they’re weighing their options but are hesitant to voluntarily lift the caps until they know what it would cost – and how much they’d have to raise the price of student health care to pay for it.

“It’s a front-burner issue,” said Peter Taylor, UC’s chief financial officer, who became aware of the problem last summer. “We’re not making a profit on (student health care) – but I can’t afford to lose money, either.”

Kenya Wheeler did hit his lifetime cap, was turned down for Medi-Cal but then married his girlfriend so he could continue receiving insurance through her plan. The Chronicle reports his cancer is now in remission.

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