Health insurance premiums on the rise for students on University System plan

Health Insurance prices for Montana University students are rising next semester. State universities and colleges require students have health insurance coverage. The majority of students stay on their parents’ plans or have insurance from an employer. But for the rest, the schools themselves have an insurance option for students that is supposed to save money over buying insurance on the open market. It’s that school insurance that’s rising and it’s rising a lot for older students.

Let’s do the numbers first.

If you are one of the 7,500 students that take the Montana University System health insurance and you’re less than 40 years old—your insurance costs will rise about 10 percent. It averages out to about $100 a semester. If you’re over 40 though, it goes up about 110 percent. That’s an increase of more than $900 a semester.

“No one was under any illusion that that was not going to be an impact on those students,”   said Montana University System Director of Benefits Connie Welsh.

She says this last year, the University System has been dealing with something it’s never had to before. For the first time in the history of this student health insurance program, it lost money—running in the red.

“This was the first year in 16 years that for every dollar in premiums that for every dollar in premiums we paid in, $1.30 was paid out in costs,” she said.

It’s a program with a $12.5 million annual budget. The University System had options. Officials could remove the insurance mandate. They asked student governments what they thought about that.

“And the feedback was yes, people did want to have that continue,” Welsh said.

So they started looking at increasing premiums. Welsh says they thought about flatly increasing everyone’s insurance fees. That would have resulted in a $300 to $400 dollar  for every student on the plan.

“That’s why we made a hard choice to go with age tiering. By law, it is not illegal but I understand that it feels unfair,” Welsh said.

She says unfair because the line between the 10 percent increase and 110 percent increase is right at age 40.

38 years old—10 percent increase.

39 years old—10 percent.

40—110 percent

Welsh says officials originally looked at a graduated system.

“10 percent for those under 25 and then 15 percent and 20 and 25.”

She says that didn’t reflect what they saw in the claims.

“What happened is when we actually look at the cost by those age strata it was very clear and there was a break and it was clear under 40 there was about the same cost increase and use,” she said.

Last year the program had 5 claims that were over $100 thousand. This year that number jumped to 15 claims.

The University System has had an increase in older non-traditional students. Many looking for new job skills in the down economy,

“Or in some cases people who just found that as a vehicle for easier health insurance coverage,” she said, means people taking the smallest number of credits possible to be eligible for the university insurance.

The University System has raised the minimum credit limit to prevent that, from 4 to 7 credits.

Welsh says this all will likely not be the final solution to fix the insurance plan’s financial woes and they are looking at their options.

She says even with the 110 percent increase for those over 40—premium prices are still 40 percent cheaper than on the individual market.

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