Test 1 for College Students: Picking a Health Insurer
Byline: Candice Choi AP Personal Finance Writer
NEW YORK -- It's the first real-life test for students heading off to college: picking the right health insurance plan.
The confusion starts before students even step foot on campus, when families must decide whether to sign up for a school-based health insurance plan.
Most four-year universities offer their own plans, but the costs and coverage levels vary greatly. It's also not clear how these plans will be affected by the recent health care reforms.
As with most insurance matters, there's no simple answer on which route families should take. But here's a look at what to consider.
Options and pricing
There are three basic options for students: coverage under a parent's plan, a school-based plan, or an individual policy.
Those who are already on a parent's employer-sponsored plan should likely stay put. Employer-sponsored plans tend to be the most comprehensive and affordable, relatively speaking.
But if this isn't an option, you'll likely consider the plan offered by your school. These plans are intended for students who otherwise couldn't get affordable coverage, so they tend to be cheaper than insurance policies written for individuals.
The average yearly premium for a school-based plan in the 2007-08 academic year was $850, according to a report by the U.S. Government Accountability Office.
By comparison, the average premium for college-age students on the individual market is about $1,430, according to America's Health Insurance Plans.
Make sure you don't inadvertently sign up for the school-based plan. Schools sometimes automatically enroll students unless they opt out, and the charges are folded into tuition costs.
What coverage to expect
The downside of school-based and individual insurance policies is that the coverage can vary widely, and is often limited.
For example, one school-based plan surveyed by the GAO limited benefits to $2,500 for each illness or injury. That cap could easily be exhausted by a single hospital stay.
School-based plans may also have other restrictions, such as limits on prescription drug benefits or requirements that students seek preventive care at the campus health center before going to another doctor.
The coverage on individual policies also tends to be less generous than on employer-sponsored plans. …