Student Health Insurance Sucks

A family friend is enrolling at Vanderbilt University in the fall and I was asked about affordable health insurance options. We are providing a "bridge" plan to the fall as requested, but I decided to take a look at the plan endorsed by the university.

Having had two students in college already I knew that health insurance plans pushed by universities are usually inexpensive and fine until you really need them. If you are seriously injured or develop a severe illness you will be lucky if the student health insurance plan covers 30% of your medical bills.

While college students as a whole are usually healthy they sometimes have a tendency toward what adults consider "reckless" behavior that can have a serious impact on their health. And, although rare, college students do get sick, and sometimes are even afflicted with disease normally considered to be reserved for older adults such as various forms of cancer.

So how does the Vandy health insurance plan stack up to a REAL major medical insurance plan?

Not even close.

For a 12 month premium of only $2,021 the student is enrolled in a non-renewable 12 month term health insurance plan.

What is a term health insurance plan?

One that runs for one year (or less) and terminates at the beginning of the next school year.

Some might ask "what is wrong with that?".

A lot.

What happens if your health changes toward the end of the term but you are going to need ongoing coverage?

If you are able to re-enroll as a student you can take out a new policy, but your pre-existing medical condition(s) will not be covered until the new policy is in effect for 6 months. Prior to 6 months you have coverage that is capped at $2500.

If you are not able to re-enroll, you will not be eligible for this plan and possibly will be denied coverage by traditional health insurance companies if your medical condition is serious.

So why not bypass the Vandy health insurance plan and simply buy your own major medical coverage?

No problem. Vanderbilt will allow you to submit a request for waiver of their plan as long as your other coverage meets their guidelines.

 Be underwritten by an insurance company based in the United States (international insurance companies are

not accepted).

 Have claims paid by a claims administrator based in the United States.

 Provide access to local doctors, specialists, hospitals and other health care providers in the Vanderbilt

University area.

 Have low or no deductibles (the student insurance plan has a $200 deductible per policy year).

 Cover inpatient and outpatient hospital expenses, outpatient surgical expenses, inpatient and outpatient

mental health, prescription drugs, laboratory tests and x-rays, physical therapy, ambulance, maternity and

home health care.

 Provide coverage for Medical Evacuation and Repatriation of Remains.

 Must provide coverage for the period of August 12, 2009 to August 11, 2010

In other words, you won't find a policy outside of the university that matches those criteria, but you are welcome to try.

Their "great" plan with a $200 deductible with med evac and repatriation of mortal remains may sound wonderful, and it is, until you get really sick and need it.

The $200 deductible sounds great but the $100,000 cap on benefits will fall short in the event of a major change in your health. A serious accident can easily run up $100,000 in medical bills in 60 days or less. And what if your health changes toward the end of the policy term?

Well at least you have a $2500 benefit as long as you are able to enroll for the next school year.

While low deductibles and 90% coinsurance sounds great those benefits do you no good if you run out of coverage before you fully recover.

I have run into this before with grad students at other universities. The school sets up some kind of sweetheart deal with an insurance agency to market exclusive coverage to students and the coverage sucks. If you cannot get a waiver, you are stuck with paying for a plan that can fall way short and pray that you never really need to use the plan.

Universities that push these plans should be drawn and quartered.

We have looked at student health insurance plans before and what we found is not pretty. Consider the case of Ziqu Liu. We blogged on this in April, 2008. Liu was enrolled in school and diagnosed with osteosarcoma, a rare form of cancer that is expensive to treat. The cost of Liu's care was estimated at $300,000 but only $50,000 would be covered by his student health insurance plan.

We certainly hope our friend enjoys good health while in school and doesn't have to use this horrible student health insurance plan. Vanderbilt University and other schools that peddle these lousy plans should be held accountable for insisting that students purchase these limited benefit plans.

If you have a student that will be enrolled in a university, we strongly encourage you to look at other health insurance alternatives, such as those available at Georgia Insurance Shop.

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