Health insurance Waiver for Students in US (Part 1/2): When should you opt out of University/college sponsored insurance plan?

It is a known fact that the cost of treatment in the US is among the highest in the world. As a result, most people, including foreign students who go to the US for higher studies, rely on health insurance to meet the treatment cost in case of any medical emergency or otherwise. In fact, it is mandatory for all international students to have insurance cover for them to be allowed to attend class.

Such students usually have two options with regard to health insurance- either enroll in a university-sponsored Student Health Insurance Plan (SHIP) or purchase a plan from the market and seek a waiver on the former. In part 1 of the 2-part blog series, Student Cover would explain the situations when students should opt out of university/college-sponsored health insurance plans.

NOTE: A student should only opt for an alternative plan if his or her university/college allows for a fee waiver from the institution’s plan and if the alternative plan meets waiver criteria set by the university/college. To know more about the university/college plan waiver requirements, click here.

1. When premium of alternative plan is very low

The cost of university-sponsored student health insurance plans at times can be quite expensive, especially for students coming from poorer third-world countries. In some universities, the annual premium for health insurance for international students can go from $2,500 to $4,500 per year which puts an additional financial burden on the students who have taken education loans to finance their studies in the US.

For example, the premium for a student health insurance plan at the University of Southern California for the Spring 2020 semester is $1,370. In comparison, the premium of Student Cover’s SC Elite plan is only $773* for the same period. Therefore, students who opt for an alternative plan provided by Student Cover can save $597 on insurance expenses.

2. When Cost- Sharing is low

Since health insurance plans follow a cost-sharing model, educational institutions require alternative student health insurance plans to meet the cost-sharing criteria set by their university or college.

a. Better Co-insurance alternative – Most university-sponsored student health insurance plans cover 80% (as co-insurance) of the cost of treatment while the student has to pay the remaining 20% from his or her own pocket. However private health insurance plans such as Student Cover’s SC Elite plan offer 90% co-insurance coverage. Therefore, many students prefer SC Elite over their university-sponsored health insurance plans.

b. Lower Deductible – Deductible is the minimum amount that a student has to pay from his or her pocket before the health insurance plan starts providing coverage. Deductibles in university-sponsored plans can range from $250 to $700. Students who are healthy and feel that they may not incur high treatment costs may seek plans with low deductibles such as Student Cover Plus & Student Cover Elite where a student has to pay only $100 as a deductible.

c. Lower Co-Pay –The co-pay is another element of the cost-sharing model where certain services availed by the insured person require them to pay a fixed amount as a co-pay. For example, certain university-sponsored health insurance plans require a person to pay $500 for surgery as part of a co-pay for surgeon’s fees. If the co-pay offered by an alternative plan is cheaper, students should opt for it.

d. Lower Out-of-pocket maximum – The out-of-pocket maximum puts a cap on the amount that an insured person has to pay out of his or her pocket in a plan period as deductibles, co-pays, and co-insurance. Once that cap is reached, the health insurance plan bears 100% of the health cost. For example, the out-of-pocket maximum for Student Cover Elite is $3,000 for PPO (Preferred Provider Organization) hospitals. It means that a student will not have to pay more than $ 3,000 once that limit is reached irrespective of treatment cost.

3. When the plan offers larger geographic coverage

Most university/college-sponsored health insurance plans are very localized in nature and do not cover a wider geographic area. As a result, many times, those students who have to frequently travel out of the US for academic purposes opt for those plans that provide insurance coverage overseas as well. Having health insurance that provides them coverage overseas would save costs in case a student falls sick during the trip or their travel for academic or non-academic purposes. University/College insurance on the other hand may not provide such a cover.

4. When sponsoring agency is providing its own health insurance plan

Certain students whose higher education in the US is sponsored by a sponsoring agency may have their health insurance covered by a student plan already purchased by it on behalf of the student. Such students need not get themselves enrolled in the university/college-sponsored plan as it would be an unnecessary expenditure.

5. When Parents’/Spouse’ plan covers your healthcare costs

If any of the parents or spouse of the student is already employed in the US, and if their employer-sponsored plan provides coverage for the ward or spouse, then one can opt out of the university/college-sponsored health insurance plan.

Let’s Wrap Up!

International students are required to have health insurance while studying in the US. They have the option of either enrolling themselves in the sponsored student health insurance plans of their respective institutions or purchasing an alternative plan and seeking a waiver. They should purchase alternative plans if they are cheaper, provide better and wider coverage, or have lower out-of-pocket costs. They can also opt out of university/college-sponsored plans if they are already covered by the health insurance plan of their sponsoring agency, parent, or spouse.

Disclaimer: The content of the following article is based on the personal research of the writer. Readers are advised to exercise discretion. Student Cover will not be liable for any wrongful interpretation of the content of this article.