If your son or daughter is getting ready to pack up and head off to college, don’t forget to pack a little health insurance along with the futons and orange crates. After all, the student lifestyle of late nights, one-the-run nutrition, and germ-infested dorms is more than likely to require a few trips to the doctor.
But what is the best way to insure your student’s health? The answer to that question depends on the type and quality of your existing healthcare plan. Here are four options you may want to consider.
1. Use the Student Health Plan — Some families opt for the medical plan offered by the college. While this is a viable option if you don’t have an existing health plan, it’s important to realize that these college-sponsored health plans offer extremely limited benefits. While a student plan will usually pay for trips to the college health center, they usually charge up to 70 percent more, plus a deductible for additional medical care or testing, such as lab work, X-rays and prescriptions. In addition, most student health plans only cover care received at the student health center, meaning a trip to emergency room could be financially devastating.
2. Use Your Current Health Plan — One alternative is to skip the student health insurance and keep you son or daughter on your own health plan. However, if your current plan is available to you through your employer, there is a good chance it is an HMO (Health Maintenance Organization). An HMO is the most restrictive type of health plan when it comes to choosing your doctors and medical treatment centers, and if your son or daughter attends school in another city or state, he or she will most likely need a referral to see a physician while at school.
3. Change Your Health Plan to a PPO –If an HMO is too restrictive for your current needs, this may be a good time to switch to a PPO (Preferred Provider Organization) that provides more flexibility in the healthcare providers you use. To receive maximum coverage, you need to use an in-network doctor, but your student would have the option of going out-of-network by making a small co-payment.
4. Change Your Health Plan to a combo HDHP/HSA — You may have been reading about the benefits of the Health Savings Account (HSA) ever since it was first introduced by the Bush administration in 2003. An HSA allows you combine a High Deductible Health Plan with a designated savings account funded with pre-tax dollars. You use a debit card to access the account when you need to pay out-of-pocket medical expenses. This combination HDHP/HSA plan is a good strategy if you’re self-employed and don’t have an existing health plan, and it also provides good flexibility for both you and your student. But it works best when you have only occasional medical expenses, so if you or your student have chronic health problems that require frequent trips to the doctor or numerous prescriptions, it’s best to opt for a traditional like an HMO or PPO.
Of course, you can always provide your son or daughter with a low-cost individual insurance policy. (Consider it an early graduation gift!) While not the cheapest choice, it is an excellent way to provide your student with security throughout the college years. After graduation, they can choose to maintain the policy on their own if they aren’t covered by an employer-provided health plan.