How to Negotiate the Best Student Health Plans
For universities across the United States, student health plans are critical to fulfilling duty of care obligations. While providing health insurance for students may seem relatively straightforward, these plans differ from traditional employer-based plans in a few important ways that impact how human resources and benefits professionals approach them.
Employee benefits are often looked at as a way to attract talent, but providing student health coverage is simply part of a university’s duty of care. Similarly, student eligibility depends on a student’s enrollment, a status that can change from one semester to the next. Consequently, student enrollment and payments happen at the beginning of each semester (or trimester). While this is just one example of how student plans differ from other health insurance plans, many factors go into finding the best plan for an individual institution.
This article will explore the issues higher education institutions face in negotiating student coverage, what factors they should consider, and how to get all-important benchmarking data.
Things to consider for student health insurance coverage
Insurance renewal periods can be stressful; however, when you know how to ask the right questions — and what to look for — you can turn this process into a chance to save money and/or improve coverage.
The first step to optimizing your renewal process is to review your programs' historical renewals. Compare your benefit and pricing details, looking back two or three years. This will allow you to build an understanding of the past that will prepare you for an effective comparison of the future.
How to time your renewals for student health plan
Once you understand where you want your renewals to end up, it’s time to consider timing and everything that goes into it. Start by considering state-specific limitations that may exist in your area. While it is the insurance company's responsibility to work with your local Department of Insurance (DOI), having a working knowledge of the limitations or requirements will better equip you to plan your negotiation timeline.
For example, some states have specific timelines for completing a rate filing, which can impact your timelines. There are other state-specific considerations as well. Some states, like Pennsylvania, only allow student health insurance programs to be fully insured. Understanding these requirements early on can save you time and help you better manage the process.
Allegiant’s best practice is to lock in renewals 180 days before the semester starts. Renewing early allows universities to communicate plan costs to internal stakeholders and update student materials. Student Health programs are often based on a traditional academic year, which can overlap two calendar years, making renewal timing a bit more confusing than in other sectors.
As part of renewal planning, we adopt a process where we encourage the insurance carriers to supply our clients with a pre-renewal projection. The concept of the pre-renewal projection allows an opportunity to do the following:
Build an understanding of how the program is running before the formal renewal process.
Gather insight into how an insurance carrier is leveraging their methodology in their rate development process.
Influence the insurance carrier’s factors or methodology before they file with their state’s DOI, which is important because most states will not allow carriers to change their process once filed.
Benchmarking your student health plan
There are many decisions universities must make before selecting a plan. Benchmarking the details of your coverage against other universities can help you understand more about industry norms and make better planning decisions. Specific areas of benchmarking that can prove valuable in a strategic review of your student health program include:
Benefit Levels — What are your cost-sharing features (e.g., deductibles and copays), and how do they compare to other schools?
Pharmacy — Drug costs are a crucial driver of healthcare, so understanding how other institutions address these costs is critical to determining your position in the market.
Premiums — Are schools taking the same approach as you, or are they leveraging a different strategy? Do they charge the same rate for undergraduate and graduate students or more for students on the main campus versus those on satellite campuses?
Benchmarking data can be helpful in internal discussions. Some schools have cross-functional work groups that assist in evaluating student health programs. These groups may include human resource professionals, faculty members, and students. Using benchmarks can provide significant insight and information to all participants regardless of their experience level.
Gathering this benchmarking information can be challenging. Working with partners, such as an experienced broker with other higher education clients, talking to your peers, or even asking carriers about industry norms is helpful. Consider issuing an RFP or even just an RFI. The responses will let you gather insight into what a typical plan design at universities of a similar size and population might look like. Asking the right questions is integral, but vendors are more forthcoming when trying to earn your business.
Additionally, it’s worth perusing the institutions' websites that are similar to yours. Much of this information is publicly available to students and, by extension, curious HR professionals.
Common Negotiation Points
Annual trend rates — Each carrier will leverage its annual trend rate in the projections; however, understanding your particular school’s medical trend rate can be useful in the negotiation process. Also, understanding what “medical trend” is composed of is useful in building an understanding.
Demographic changes — While student demographics will remain somewhat constant, with new students joining and older students leaving each year/semester, it is vital to understand your demographics and how they compare year over year. If you note a swing in demographics, use it as leverage to help drive pricing down. For example, if your incoming class has fewer U.S.-based students and more coming from abroad, you may want to point that out, as this group tends to access care less than U.S. students.
Benefit decrements — Carriers may immediately push you toward changing your coverage to save money. Do not consider benefit changes until you get to the final renewal pricing. If the cost is still unacceptable, it may be time to consider changing your benefits.
The many factors that influence student health plans
Dozens of factors go into negotiating fair and inclusive insurance coverage for student populations. Working with a partner with solid underwriting expertise is essential. At Allegiant, we have over 25 years of underwriting expertise and team members who have underwritten more than $1 billion in annual health insurance premiums. Having this knowledge and experience on your side, protecting the investment and interest of your student health program, is essential.
If you have questions about your coverage, do not hesitate to contact me or any member of the Allegiant team.