Health insurance for students -- subsidy discrimination?

[kuharris]

Student health insurance at my university is in a confusing situation, and I hope someone here can help.

Since the mid-2000's, graduate students who either work 20+ hours per week or receive a fellowship of $10k+ for the year have been required to purchase a student health insurance policy. Currently, that policy is a $250 deductible and 80/20 coinsurance up to the out of pocket maximum ($6k or so).

However, premiums have recently risen (insurance company cites the Affordable Care Act), and so student representatives pushed to have a second insurance plan offered. A high deductible plan ($1500) that also enables students to open and contribute to their own health savings accounts.

However, even after a couple students signed up on the plan, our Grad School decided they don't like the HDHP/HSA option. They decided not to advertise the plan further, and to not allow any advisor to subsidize it. The Grad School says that if students want the HDHP/HSA, they must request a paper application from our Health Center and ask their advisors to increase their salaries as an indirect health insurance subsidy.

The Grad School administrators also say they are afraid of a $100/day IRS penalty if they subsidize the HDHP/HSA plan. The plan was created and offered through the university, so I don't think that is a correct fear, but I'm not sure. Would they be penalized for subsidizing a second plan?

Can they pay 80% of students' premiums on the low deductible plan, but 0% for students on the high deductible plan? And can they encourage students to request a "subsidy" through a salary increase? This seems to allow students to take the salary increase, then sign up for the university's low deductible plan -- in a sense, getting twice the benefit (though no HSA).

Your thoughts are appreciated. I was referred to you all by a financial forum I trust, and as a student would really appreciate your insights.

[leevena]

Difficult to answer your questions because I do not know enough about your current plan of benefits and funding arrangement. Be that as it may, there is a very good chance that your plan's cost did rise because of ACA. Student health plans historically have had benefits were not very great. Under ACA this is not allowed, so assuming your plan of benefits needed to be increased, it would follow that the costs were increased.

As to the second plan option, i will assume that the plan meets all legal requirements. That being said, it is puzzling why the school would want to make it more difficult to enroll. Could be a situation of adverse selection, but without seeing more information I cannot answer with confidence. An HSA is a funding vehicle that belongs to the enrollee, not the school. They have no power over what the enrollee does or does not do with it.

Again, without any more data/information I cannot give you a better answer. Hope this helps.