Grad Student Health Insurance On the Line

For Chereta Quána Madison, access to subsidized student health insurance was literally a matter of life or death.

Madison, a Ph.D. student in educational foundations, policy and practices at the University of Colorado at Boulder, started collapsing in public last January. By the end of February, she was confined to bed, watching videos of her classes because she couldn’t walk without debilitating pain.

Her graduate adviser suggested that she take a medical leave of absence. But Madison refused. If she was no longer enrolled, she would lose access to the Student Gold Health Insurance that could help cover a host of evaluations and surgeries.

Like Madison -- who was ultimately diagnosed with early-stage ovarian and uterine cancer -- graduate students across the country are struggling to maintain access to subsidized health insurance. But unlike Madison, their access is being jeopardized by confusion over whether universities can provide subsidized health insurance to graduate students while complying with the Affordable Care Act.

When the ACA was enacted in 2010, many institutions were providing graduate students with student health coverage at reduced or no cost as part of their benefit package. In particular, many universities were using arrangements designed to pay for student health insurance through a credit, offset, reimbursement or stipend.

But in 2013, the Internal Revenue Service issued guidance that said employer payment plans could not be integrated with individual insurance coverage. In other words, employers could not provide money to employees for the purposes of purchasing individual health insurance.

In February, the IRS released a further notice that said providing subsidized health insurance for graduate students may violate the ACA. The notice relied on two lines of reasoning. The first was that U.S. Department of Health and Human Services' regulations define student health insurance as individual health insurance. The second was that graduate students engaged in teaching and research assistance fall under the common law definition of employees, and thus the arrangements that reduced their premiums might be an impermissible employer payment plan.

The February notice provided temporary transition relief, which allowed institutions to continue offering subsidies through the 2016-17 academic year. But for many universities, the path after this year remains unclear.

Federal agencies “haven’t really provided schools with a road map about how they’re supposed to comply with the Affordable Care Act,” said Steven Bloom, director of government relations for the American Council on Education. “The position of the government thus far is potentially detrimental for graduate students.”

Senators Step In

Seventeen Democratic senators issued a letter last week urging the Obama administration to clarify that universities can provide subsidized health insurance to graduate students while complying with the ACA.

The letter calls for the government to provide swift clarification, as many universities will soon negotiate the terms of their student health insurance coverage for the upcoming academic year. “Thousands of graduate students at campuses across the country could potentially be affected, costing students and schools millions of dollars,” the letter reads.

The letter points to the February IRS notice as advancing a problematic interpretation of the law. “IRS Notice 2016-17 allowed institutions to continue offering subsidized coverage for most graduate students in the 2016-17 academic year, enabling many students to continue to receive health care coverage this year,” the letter reads. “However, it also reiterated an interpretation of the law that could jeopardize graduate students’ access to health coverage.”

“I was very pleased to see the senators’ letter, because I think it addresses some very pressing and important issues for graduate education,” said Barbara Knuth, senior vice provost and dean of the graduate school at Cornell University and former chair of the board of directors of the Council of Graduate Schools. “The letter was clear and very helpful in pointing out how the guidance that was issued was inconsistent with the goals associated with the Affordable Care Act.”

Bloom said the letter illustrates the national importance of the issue of health insurance for graduate students. “It’s pretty significant that that many senators would take a position on this,” he said. “It shows their interest in advancing a goal of the Affordable Care Act, which is ensuring that graduate students get access to high-quality, affordable health insurance.”

Kristofferson Culmer, president and CEO of the National Association of Graduate-Professional Students, said the association supports the intent behind the letter. “However the law is applied and interpreted, we don’t want to see graduate students disadvantaged with regards to benefits that they really need to survive throughout their academic careers,” he said.

Graduate students with spouses or children especially stand to benefit from subsidized health insurance, Culmer said. A family plan can cost about a third of a graduate assistant's average annual income.

The letter ultimately plays into a longstanding debate about whether graduate students should be viewed as employees or students, Culmer said. This debate has often flared in the context of graduate students' unionization efforts, since employees are entitled to collective bargaining rights.

"There are a number of campuses where graduate student bodies are seeking to recognize themselves as employees," Culmer said. "Our association supports students' rights to self-determination in terms of how they want to be viewed by their university."

‘Up in the Air’

Institutions across the country are currently grappling with shaping new policies on health insurance for graduate students after this academic year. The University of Missouri in particular has generated debate over its handling of the matter.

Last summer, Missouri announced that it would cancel graduate student health insurance subsidies in an effort to comply with the 2013 IRS guidance. Administrators explained that this guidance threatened to impose steep fines -- up to $36,500 per student per year -- on institutions that offered graduate students subsidies for the purposes of buying individual health insurance from market plans.

But after graduate student workers planned a walkout in protest, Missouri reversed its decision and pledged to continue offering graduate students health insurance subsidies through this academic year. R. Bowen Loftin, the system's chancellor at the time, also charged a task force with identifying alternative ways of providing graduate students with subsidized health insurance in the future.

“We have committed to offering the same health insurance plan to graduate students this coming academic year that we currently offer,” said Christian Basi, associate director of the news bureau at the University of Missouri. “We’re going to do our best to continue to meet their health insurance needs as the federal government clarifies the law in this area.”

In its final report last fall, the Missouri task force recommended that the administration consider three options: providing graduate assistant students with financial fellowships, increasing their stipends or offering them an additional silver-level insurance plan. The report noted that the silver-level plan “provides a lower actuarially determined benefit, but the premiums are lower cost.”

But Culmer, who is also a doctoral candidate at Missouri, said the three options largely met with disapproval from the graduate student body. “All three options were inferior to the way we were being provided insurance at the time,” he said. “Students and the community voiced concerns to keep the status quo.”

“The 2017-18 academic year is up in the air right now,” Culmer added. “Students are going to work with the administration productively on this issue this year.”

While Missouri has generated controversy over its policy on health insurance for graduate students, Cornell has been re-examining its policy with little fanfare.

Graduate students at Cornell are currently issued a platinum-level plan that comes with lower out-of-pocket costs, including lower co-pays and deductibles, Knuth said. But administrators are weighing two alternative options for providing health insurance to graduate students after this academic year, she said.

The first option would be to start including graduate students in the employee health insurance plan, Knuth said. But this option essentially entails "worse coverage at a higher cost," she said. "Costs would go up for Cornell by about $11 million per year, with students getting worse coverage."

The second option would be to start issuing graduate students a qualified group plan on the open market. Before pursuing this option, administrators would conduct an analysis of whether it would provide satisfactory coverage for students, Knuth said.

Looking ahead, Knuth remains optimistic that the government will see the merit of letting universities continue offering subsidies to graduate students as in the past. "I don't have predictions -- I just have optimism and hope," she said.