Insurance for international students in the US: do policies make the grade?

Health insurers in the US usually have a network of healthcare providers they have agreements with – known as preferred providers – which means hospitals within that network get paid directly by the insurer. This gives them certainty of payment, and they may not be willing to take on a patient that has to pay themselves or even one with insurance from a different network, as they would still have to pay upfront then claim the money back from their insurer.

The first question is always how you’re going to pay

Insurers also negotiate reduced fees with the providers in their network. “Discounts can be 50 per cent or more if you have the right network logo on your insurance ID card so it’s really important that students have health insurance – you overpay without it and you might have a hard time getting treated without it,” said Edward Lane, Vice President Sales at insurance brokers Global Secutive and Compass Student Insurance, which specialise in health insurance for international students.

“Universities are obligated to make sure students have the resources to be healthy and safe and do their best work as a student,” he added. “If they’re having a hard time getting treatment or dealing with medical issues, they won’t be able to do that.”

Health insurance requirements

Most universities and colleges in the US require students to have health insurance to be able to enrol in their courses and different universities have different requirements, which can depend on what state they’re in. Some require students to have fully comprehensive Affordable Care Act (ACA) plans while others accept minimal plans that cover just accident and sickness. The cost of these could be $4,000 a year for an ACA plan versus $1,400 for a low-end one, according to Lane, so the difference is huge.

The ACA – also known as Obamacare – became law in 2010 and expanded access to health insurance by creating federal or state-run marketplaces selling certified plans. These plans must include 10 essential health benefits, including for maternity and mental health, as well as emergency services and hospitalisation, and provide cover for people with pre-existing medical conditions.

Universities usually offer their own Student Health Insurance Plan (SHIP) to domestic students by partnering with an insurer and may offer the same plan to international students, or a different one, which can be cheaper. Students are often automatically enrolled in it. SHIPs can be relatively expensive but students may be allowed to take out their own policy instead – either in their home country or in the US – as long as it meets certain criteria. They need to apply to waive the requirement to be enrolled in the SHIP to be able to do this.

Most universities and colleges in the US require students to have health insurance to be able to enrol

Claudia Reichstein, Head of International Programmes at insurance broker DR-WALTER in Germany, said: “We often receive waiver forms from students applying for US universities and these waiver forms show the coverage the university is asking for. They need medical coverage for outpatient and inpatient treatment and very often we see requirements for pre-existing conditions, pregnancy, mental health and prescription drugs cover.”

She added that, although German students going to study in the US may want to take out a policy in Germany to avoid the high deductibles and co-payment fees that can come with SHIPs to keep their premiums at a reasonable level, the policies DR-WALTER offers may not have sufficient cover in areas such as pregnancy or pre-existing medical conditions to meet the university’s requirements. This is more likely when ACA plans are required.

In some cases, health insurance is a visa requirement. The F-1 visa needed to enter the US as a full-time academic student at a university or college doesn’t require that the student has health insurance, but the J-1 visa for students participating in exchange programmes does. You must have health insurance for the duration of your stay with cover of at least $100,000 per accident or illness, $25,000 for repatriation of remains and $50,000 for medical evacuation. The deductible per accident or illness must not be more than $500.

Ensuring sufficient cover

Although there is usually a minimum level of cover a student must have as dictated by their university or visa, they could still find themselves underinsured if they don’t have coverage beyond this. “$100,000 per accident or illness might be required by your visa, but this will go very quickly,” said Suzanne Morrow, Senior Vice President at US travel insurance comparison site InsureMyTrip. “People think they’re bulletproof but if you play sports, for example, this is something you could be hospitalised for.”

InsureMyTrip’s Academic Explorer policy, which it offers to students travelling to the US for educational purposes for up to a year through schools, universities and other education providers, includes an optional ‘interruption for any reason’ benefit should they need to return home because of an unforeseen event.

“One of the biggest issues for students is mental health,” said Morrow. “They may feel they can’t cope and want to go home but they’ve spent money to be there. Interruption for any reason means they can get money back for their tuition and accommodation expenses.” This is not something that would be covered under a typical student health insurance policy.

International students need repatriation and evacuation cover in addition to medical cover so, even if a university requires a student to have a comprehensive ACA health insurance plan, they need to make sure they have this additional coverage. Lower-end health policies could also exclude certain conditions such as sexually transmitted diseases, which could be an issue for students.

Students should be doing research on the policies. They should be looking at the deductibles and any catches

Lane believes that universities insisting on international students as well as domestic ones having an ACA plan may not always be in their best interests and that a targeted approach is often better. “It might cover things they don’t need and not things they do. It might not have medical evacuation or an assistance programme,” he said. Another benefit that would be useful but not included in a SHIP is emergency family reunion cover, which pays for a family member to visit the student if they’re hospitalised.

“Universities should think about how they’re spending the money in their SHIP plan and whether they should require all their students to have the same coverage,” said Lane. He pointed out that, with high school exchange programmes, students will usually be sent home if they become pregnant during the programme, so this group may not generally require pregnancy-rated medical services. “They could get rid of pregnancy cover and make sure it has enhanced evacuation, for example.”

Alternative insurance options

As a university’s SHIP may not always provide the right cover for an international student or offer the best value, students need to take the time to look into what it covers and, if the university allows it, whether they can get a more suitable insurance policy elsewhere that meets the university’s requirements as a minimum. They also need to think about their individual needs when shopping around.

For example, if they have a pre-existing medical condition, an ACA plan could be the best option as it has to be covered as standard. “Students should be doing research on the policies. They should be looking at the deductibles and any catches in the policy,” advised Carole Tokody, CEO of geolocation security and evacuation cover provider Crisis Cover, which offers a membership specifically designed for students called Student Parachute. “Universities will suggest what they need so that’s a good place to start, but they still need to read through the policies and understand what the degradation is as you get down to cheaper products.

“They must make sure they buy a policy intended for students and that any family members coming with them to the US are covered too – which may be particularly relevant to graduate students.”

US health insurance broker websites catering for students, including Compass Student Insurance, will often ask which university or college a student is attending before displaying insurance options. This is to make sure they match the institution’s requirements and that it’s likely to accept the policy. According to Lane, policies bought this way could be 10 to 30 per cent cheaper than the university’s SHIP.

Policies can’t stay the same for 20 years – they need to be developed and adapted to the needs of students

Although the current policies available to international students do generally provide them with sufficient medical and assistance cover, insurers should continue to review their offerings to make sure they’re serving the requirements of this changing demographic.

“Insurance providers must educate themselves about the needs of the market,” commented Reichstein. “Do they need to provide more mental health coverage, for example, as there is more mental illness now? Policies can’t stay the same for 20 years – they need to be developed and adapted to meet the needs of students. It’s important that they adapt to the environment and how Generation Z behave and travel.”

Tokody agreed: “If I was a health insurer, I would be working with universities to see what I should be doing. I think mental health cover should be included as standard.”