Aaron Smith is learning the hard way that student health insurance has limits. After breaking his wrist snowboarding in 2008 and twisting his knee playing soccer last year, the 28-year-old Georgetown University law student racked up $925.69 in medical bills, his share of the cost under Georgetown’s UnitedHealthcare student health plan. Smith, who also heads up the Young Invincibles, an advocacy organization that aims to protect the health-care interests of young adults, says his experience is not unusual for people in that age group. “These kind of accidents do happen,” he says.

The new health overhaul law is expected to help a lot of young people, whether students or not. One widely publicized provision taking effect in October will allow young adults to stay on their parents’ health insurance until age 26. Many insurers have said they’ll implement it in time for students graduating this spring.

But for students who, like Smith, are older than 26, and for those who can’t take advantage of the law because their parents don’t have coverage or for other reasons, student health plans may be the only option. And unfortunately, many college plans offer limited protection, even for this generally healthy group. “Sixty percent of the plans out there are pure junk,” says Stephen Beckley, a health-care management consultant for colleges and universities who’s based in Fort Collins, Colo.

In some important ways, the new law has the potential to stiffen the backbone of student plans. Starting in October, all health plans, including college ones, must eliminate lifetime limits on coverage and most annual limits as well. The law also requires health plans to spend 80 to 85 percent of the premiums they collect on clinical services and quality measures starting next year, or give consumers a rebate.

It can’t happen soon enough. Insurance plans don’t typically limit coverage for particular conditions, and most have maximum coverage limits overall of $1 million or more. But a Government Accountability Office report found that nearly all of the 194 student plans reviewed had maximum benefit limits, mostly on a per-condition basis; and the typical plan paid a maximum lifetime benefit of $25,000 per illness or injury.

For Gillian Mason, enrolled in the combined master’s/PhD program in American studies at Boston University, the $2,000 annual limit on prescription drug coverage in her Aetna student plan is an ongoing problem. Now 30, Mason arrived at BU in 2001. Suffering from cyclic vomiting syndrome, “I burned through that drug cap by March or April of every year,” she says.

Now, though her condition is under control, Mason says she still spends at least $1,000 out-of-pocket annually for drugs. A university spokesman says that this year she could have upgraded her coverage to an overall policy limit of $500,000 a year, including drugs, for an additional $623.

All students should carefully evaluate their school plans and compare them to other options. Look at the deductible and out-of-pocket spending limits to understand how much you may owe in addition to premiums, says Sara Collins, vice president of the Commonwealth Fund, a health-care research group. It’s also a good idea to eyeball specifics that often affect young adults, including emergency care, maternity coverage and mental health benefits, she says.

The extent to which the health law forces further changes to student plans will depend in large part on how the plans are defined by federal regulators, say health policy experts. Starting in 2014, individual plans will have to offer a comprehensive package of “essential health benefits.” Large-group plans, however, won’t have to meet that requirement. “The statute doesn’t recognize non-employer group plans,” says Timothy Jost, a law professor at Washington and Lee University.

Georgetown law student Smith says he’s encouraged that the health law will give students like him more options. They may qualify for the expanded state-federal Medicaid program for the poor. Alternatively, they could buy health insurance on the new state-based exchanges starting in 2014.

When that happens, “it could marginalize the college plans,” he says. Or maybe they’ll become better plans. Either way, students are likely to come out ahead.

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(By Michelle Andrews, Washington Post)

Many college health-insurance plans fail to provide students with minimum coverage and often pay out far less in benefits than they collect in premiums, New York State Attorney General Andrew M. Cuomo says.

Plans with low coverage limits, numerous exclusions and high premiums “leave students at risk while providing massive profits for insurance companies,” the high-profile AG and likely NYS gubernatorial candidate said in a statement yesterday. He said his office has subpoenaed 10 insurers that are big players in the college health market as well as five insurance brokers, agents and others in the field.

Aetna, one of those receiving a subpoena requesting information, defended its plans. “The plans are very affordable based on the population; they average about $1,100 a year” and cover students “at home, at school and even internationally,” a spokesman told the New York Times.

A big issue here is the loss ratio — how much of their premiums collected are paid out in benefits. Plans in NYS usually have to have a ratio of at least 65% but Cuomo’s investigation found college plans that didn’t. Under the new federal health overhaul, most large plans, including college-sponsored offerings, the NYT says, will be required to have loss ratios of 85%.

But the federal overhaul will affect the college plans in another way because parents will be able to keep coverage for children until their offspring reach age 26, likely cutting into the college market. Cuomo said the college market — made up of generally healthy students — produces more than $1 billion in revenue for the insurers, which charge premiums anywhere from $100 to $2,500 a year for each policy.

Cuomo has written to more than 300 colleges advising them to check their plans for shortcomings and for conflicts with the new fed rules. No legal action has resulted from any of this, but memories are still fresh about Cuomo’s probe into student-loan practices that shook up a lot of colleges and lenders starting in 2007.

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(By James White, WSJ)

Graduation season is a time of oddly mixed emotions for the people finishing college and graduate school. On the one hand, there is pride in a job well done (or relief at simply getting through) and the satisfaction of having finished a long, hard slog. On the other, there is primal fear. Will anyone pay me to do something I’m good at? And will I actually have enough money to live on?

We push our graduates out into the world with little or no financial education; that much has been true for years. Meanwhile, their student loan debt has grown over time, with the median debt for bachelor’s degree recipients who did take out loans hitting $20,000 in 2007-8, according to the College Board’s 2009 Trends in Student Aid study. This year, many graduates are being greeted by an uninterested shrug from employers as they try to pay that all back.

There is some good news this graduation season, though. In four crucial areas — health insurance, banking, credit cards and student loans — there have been enormous shifts in the legislative and regulatory landscape in the last 12 months. These changes should ease some of the pain as new graduates try to establish themselves financially.

So before you leave for your postgraduation road trip (or buy yourself something nice for the first time in four years to celebrate the end of tuition bills), give the points below a quick skim. So much has happened in the last year, you’ve probably missed at least some of it.

HEALTH INSURANCE First, do no harm. A bad accident or illness could be financially catastrophic for you or your family if you don’t have health insurance. Keeping or getting insurance is about to get easier, since the health care bill that President Obama signed in March requires insurance companies that already provide dependent coverage for children to allow unmarried offspring to stay insured on their parents’ plans until they turn 26.

This part of the bill doesn’t go into effect until Sept. 23, and there’s still a lot of uncertainty about exactly who will benefit before or after that date as companies and insurers wait for more clarity from regulators on how to put the new rules into place.

Many insurers, including independent Blue Cross Blue Shield providers and UnitedHealthcare, have announced efforts to allow graduating students who are currently on their parents’ plans to stay there to avoid any gap in coverage. Ask your human resources department or insurance company about this possibility if you are a parent and your graduating child is still on your health insurance plan.

That said, your company may not allow your child to remain on the plan after graduation this year even if the insurance company it works with can make it happen. And even if your employer does allow your child to stay on, it’s not yet clear how much it will cost, though paying a young adult’s premium is about as practical a graduation gift as you’ll find.

What if you’ve been on a student health insurance plan and want to switch to your parents’ plan now? Or what about people who are uninsured and 24 and want to return to their parents’ coverage as soon as possible? You may have to wait until the next open enrollment period for your parents’ plan, according to Brett Lieberman, a Blue Cross Blue Shield spokesman. Insurance companies may offer short-term or other plans to bridge the gap during the months until then.

Stephen L. Beckley, a consultant who specializes in student health insurance, notes that most graduating college students enrolled in student plans will have coverage through the summer. Call and ask to be sure. Also, some states already have laws similar to (or tougher than) the new federal one.

BANKING AND DEBIT CARDS So you’ll need a checking account. Perhaps you already have one.

What you may have missed, however, is that starting July 1, banks will no longer allow you to spend more money at a store with your debit card (or withdraw more at the A.T.M. machine) than you have in your account unless you’ve given them permission first. The federal government made them do this, since banks were infuriating so many customers by charging them repeated overdraft fees when they overspent.

Let’s assume that you don’t want to opt in to taking your balance below zero and would rather ask the bank to cut you off if you don’t have enough money in your account. If enough people do that, banks will lose lots of fee income and may use that as an excuse to tack monthly fees onto your checking account. The lower the balance in your account (and recent graduates tend to live hand to mouth), the more likely it is that your bank may try to charge you money.

Even if this happens, I’m confident that some institutions will remain free of monthly fees. If there’s a credit union at your college that offers fee-free banking, it may let you keep your account after graduation (check to see how much you’ll pay to withdraw money from other institutions’ A.T.M.’s, though). Or you can search for a new one at findacreditunion.com. Take a look, too, at banks with no branches, like PerkStreet Financial and ING Direct.

CREDIT CARDS The credit card legislation that passed in 2009 contained so many new rules that it went into effect in phases, including a bunch of regulations that began earlier this year. There are too many to list here, though the Federal Reserve has published an excellent plain-English guide that I’ve linked to from this sentence in the online version of the column.

I’m a big fan of the rule requiring card companies to get your permission before they’ll let you spend more than your credit limit (and charge you fees for the privilege). This always struck me as particularly noxious, and in the wake of the new rules, some card companies like American Express have simply stopped charging the fee to people who go over the limit (or cuts them off if the company thinks the spending is getting out hand). This is particularly helpful to younger people who may have lower credit limits and thus breach them more often.

Beth Kobliner, the author of “Get a Financial Life: Personal Finance in Your Twenties and Thirties,” is partial to the new rule requiring better information on the card statement. Now, it must state how long it will take to pay off your balance if you make only the minimum payment that the card company requires. It also must let you know what your monthly payment would be if you want to pay the balance off in three years. “It’s eye-opening for everyone, but particularly for young people who never realized how expensive putting something on the card and paying only the minimum can be,” Ms. Kobliner said.

One word of caution here. There’s another new rule that will make it much more difficult for card companies to put new plastic in the hands of people under the age of 21. As a result, card issuers may chase newly minted graduates that much harder with offers that sound too good to be true. Read your junk mail with caution and skepticism.

STUDENT LOANS Last July, a new program went into effect that can lower monthly payments on federal student loans for people who don’t earn a lot of money. It’s called income-based repayment, and it’s a bit complicated. Essentially, if your income is low enough (depending on your family size), it’s possible that your lender will limit the size of your monthly payments. And after 25 years of payments, the lender may even forgive your remaining loans.

To see if you qualify, use the calculator at ibrinfo.org, a site that a nonprofit organization, the Project on Student Debt, created. The site also has a lot more information about how the program works — and additional information about a program that could forgive federal loan debts after 10 years of repayment for people working in public service jobs.

Still confused? Try checking in with a financial aid officer at your school, even if you’ve already left. “They’re the thankless heroes in this, who really want to help,” said Ramit Sethi, author of “I Will Teach You to Be Rich,” another excellent book for young people trying to learn more about money.

FORWARDING ADDRESS This one’s not new, but it trips enough people that it bears repeating. Your physical address may change in the next few months, perhaps more than once. Or you may start using a new e-mail address or begin getting bills from companies that you haven’t worked with before, both of which can lead to important messages getting caught in a spam folder.

You see where this is heading, right? You can’t pay bills that you don’t see. So let people know where to find you. Mark due dates in your calendar. And make sure you have the ability to pay your credit card and student loan bills online from any computer, wherever it is you may go on your victory tour in the next couple of months. That way, you won’t return to find the kind of damage to your credit history that can set you far back on the path to financial health.

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(By Ron Liber, NY Times)

Health insurance plans for college students often rip off the students that they claim to serve, a New York State investigation into the policies offered by more than 65 institutions has found.

 Among the problems identified by Attorney General Cuomo and his staff over the course of a 17-month examination: policies that don’t pay for primary care services or prescription drugs, overpriced premiums for the benefits they provide, and atypical coverage exclusions, like not paying for injuries related to alcohol or suicide attempts. The attorney general has also unearthed conflicts of interest and unethical payments made to colleges by health insurance-related companies seeking to do business with them.

  Many colleges require students to buy a private plan selected by the institution if the students can’t show that they’re covered by family plans. The investigation focused on the institutional plans, many of which, Cuomo said, “leave students at risk while providing massive profits for insurance companies.” An insufficient plan, he added, “can have catastrophic and long-lasting effects on a young person’s life.” 

Cuomo’s findings, said James Turner, president of the American College Health Association and student health director at the University of Virginia, vindicate what many college health professionals already see in the field. “The attorney general rightly has expressed concern about poor quality insurance plans,” he said.

 Jim Mitchell, director of Student Health Services at Montana State University and spokesman for the Lookout Mountain Group, which advocates for student health care, said the frauds and inequities exposed by Cuomo are “accurate, and this sort of thing goes on all over the country.” 

Cuomo has asked the presidents of more than 300 postsecondary institutions – most in New York State, but a few dozen out-of-state and enrolling New Yorkers – to reexamine their student health insurance plans in light of his findings and to determine whether they really do meet students’ needs. 

Cuomo also set out half a dozen suggestions for how colleges can best manage their plans, including by providing adequate coverage; controlling their relationships with insurance brokers, agents and consultants; prohibiting college employees from accepting anything of value with service providers; rejecting exclusions like not covering alcohol-related injuries; and maintaining appropriate cost ratios. At institutions that mandate coverage, admissions materials should clearly disclose the cost of a plan. 

Turner applauded Cuomo’s call for improved plans. “His recommendations really affirm ACHA’s position of having very high quality student health insurance benefit plans. Most of his suggestions, in fact, follow the very guidelines we’ve set.” 

Steven M. Bloom, assistant director of federal relations for the American Council on Education, supported Turner’s position. “We agree that colleges and universities should be able to continue to offer low-cost, high-quality plans and that they would meet a certain standard,” he said, making reference to ACE and ACHA’s efforts to make sure President Obama’s health care reform law allowed for student health insurance plans’ continued existence.

 Turner said that “naiveté on the part of the college that’s putting together the benefits program” is also to blame. “Some colleges perhaps don’t look carefully enough into what’s contained in these insurance plans.”

 Laura L. Anglin, president of the Commission on Independent Colleges and Universities, which represents New York State’s private institutions, said student health insurance is an issue her member institutions “take very seriously.”

 David M. Henahan, director of media relations for the State University of New York, said that while the system’s 64 campuses buy policies independently “because there is a great deal of difference in the needs of each SUNY campus,” the system will heed Cuomo’s recommendations. “We’ll look at them, review them and implement them in any way we can.”

 Cuomo’s investigation also included the subpoena of records from 10 of the nation’s largest health insurance companies.

 A spokesman from UnitedHealthcare said the company “continually strive[s] to improve access to quality, effective health care for all Americans, including students,” and has been working with Cuomo to help provide institutions “with affordable coverage that gives students meaningful access to health care services.”

 Matthew Wiggin, head of business communications at Aetna, said the insurer works “closely with the colleges and universities to develop health care plans that meet the health care and financial needs of their students.” The company’s average student health plan costs $1,100 a year, but its benefits vary widely by institutions.

 This is not Cuomo’s first foray into investigating bad business practices in higher education. A Democrat who is widely seen as a front runner in this fall’s New York gubernatorial race — though he has yet to formally announce his candidacy – Cuomo initiated a nationwide examination of student lenders which has resulted in the return of $3.5 million to students and families.

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(By Jennifer Epstein, Inside Higher Ed)

ALBANY, N.Y. (AP) — Many college-sponsored health plans offer students inferior coverage at excessive cost, state Attorney General Andrew Cuomo said on Thursday.

He said many plans, which are often mandatory at colleges, don’t provide the level of coverage students need. They seem like low-cost options for the schools to offer students, but since insurers pay out so little for benefits the plans can be lucrative for the insurance industry.

”A bad health insurance plan can have catastrophic and long-lasting effects on a young person’s life,” Cuomo said in a statement. ”By being informed of the problematic practices that currently exist in the industry, schools can negotiate for better health plans.”

Many don’t cover common health problems that students face, such as injuries sustained while drunk or attempting suicide. Some plans cap all coverage at less than $25,000, while others have per-illness caps of as low as $700. Many don’t include prescription drug coverage or dramatically limit that coverage.

Cuomo sent a letter to more than 300 schools, advising them to review their sponsored student health insurance plans and correct potential situations where coverage was overpriced, or so minimal it would put students at risk.

The school-sponsored student health insurance industry generates more than $1 billion of revenue per year, and about 1 million students nationwide get health insurance through such plans, Cuomo’s office said.

The plans can cost students less than $100 a year, or as much as $2,500, Cuomo said.

The office has subpoenaed 10 of the largest insurers of students and five insurance brokers, agents, and consultants as part of the investigation.

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(By New York Times)

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