Administration Allows Colleges and Universities to Continue Subsidizing Graduate Student Health Plans
October 24, 2016

Three federal agencies last week announced that colleges and universities can continue providing subsidized student health insurance plans (SHIPs) to graduate students under the Affordable Care Act (ACA).

The departments of Labor, Health and Human Services (HHS), and Treasury issued an FAQ that extends the temporary enforcement relief provided earlier to higher education institutions pending future agency guidance. The document acknowledges that SHIPs are often part of a “large and complex admission offer and acceptance process” and that Congress intended the ACA to preserve the ability of institutions of higher education to offer student health insurance plans.

HHS issued a rule in 2012 establishing that student health insurance is a form of individual market coverage. This rule was followed in 2013 by guidance issued by the IRS prohibiting employers from reimbursing employees for individual market premiums (i.e., under premium reduction arrangements). Last February, Labor, HHS and Treasury issued further guidance concluding that SHIPs likely violated the ACA, but at the same time granting higher education institutions a transition period through the 2016-17 academic year during which they could continue offering coverage.

ACE and a group of seven higher education associations sent a letter (352 KB PDF) Sept. 6 to the leaders of the three federal agencies urging them to find a permanent solution to this issue. The letter followed a similar one sent in June by Sen. Chuck Schumer (D-NY) and 16 other Democratic senators.

“We’re very appreciative of what regulators and the administration did today,” ACE’s Steven Bloom told Inside Higher Ed. “We think it solves an immediate problem that many schools were having a difficult time figuring out what to do for the upcoming year.”

ACE doesn’t consider the issue to be entirely resolved, but for now, Bloom said, colleges and universities can continue what they have been doing to offer subsidized health insurance to graduate students.