Big Win for Grad Students

Federal regulators indefinitely stay IRS enforcement ruling that subsidized health insurance plans for graduate students violated provisions of Affordable Care Act.

October 24, 2016

Federal regulators released guidance on graduate student health insurance subsidies Friday that should provide reassurance to universities considering whether they will still offer the subsidies. The guidance likely will be viewed as great news by many graduate students.

An Internal Revenue Service interpretation of the Affordable Care Act barred large employers from subsidizing employees’ purchase of health insurance on the individual market -- a view the agency applied even to student health insurance plans negotiated by a university with insurers. That interpretation had left many large public universities scrambling over the last year to identify alternative options to provide affordable insurance to graduate workers.

Many advocates for graduate students and leaders of universities said that the IRS interpretation ignored the many ways in which universities subsidizing graduate student health insurance are not typical of the kinds of employers that the health care law sought to regulate.

The government in February said agencies would wait until the 2017-18 academic year to enforce that interpretation. The new guidance released Friday by the Departments of Treasury, Labor, and Health and Human Services indicates they will extend that nonenforcement indefinitely.

“We’re very appreciative of what regulators and the administration did today,” said Steven Bloom, director of government relations at the American Council on Education, which advocates on behalf of public and private colleges and universities. “We think it solves an immediate problem that many schools were having a difficult time figuring out what to do for the upcoming year.”

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

The Kansas Board of Regents announced this month that public universities in the state would cease offering those subsidies next year in response to the IRS interpretation of the Affordable Care Act. Bloom said it’s possible some member universities that were considering the same decision as Kansas may reconsider in light of the additional guidance Friday.

Breeze Richardson, a spokeswoman for the Kansas Board of Regents, said there was now no reason for state institutions to stop offering subsidies currently in place.

“We are extremely pleased about this latest decision and hope that the federal agencies involved will make it a permanent one,” she said in an email.

In 2015, the University of Missouri announced shortly before the fall semester was to begin that it would stop offering subsidies for health insurance to its graduate students. In the face of protests and after the involvement of Senator Claire McCaskill, a Missouri Democrat, the university changed course and reinstated the subsidies indefinitely.

Kristofferson Culmer, the president and CEO of the National Association of Graduate-Professional Students, said the group was relieved to see the extension granted indefinitely for universities.

“A lot of the options they were looking into were ultimately going to raise costs for individual students as well for the universities,” he said.


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