20 West State Street, 10th floor
CN 325
Trenton, NJ 08625
TO: ALL CARRIERS ISSUING LIMITED ACCIDENT AND SICKNESS COVERAGE TO COLLEGE AND UNIVERSITY STUDENTS
FROM: Kevin O'Leary, Executive Director
RE: Joint Bulletin 95-01
DATE: May 15, 1995
Joint Advisory Bulletin 95-01 clarified that the IHC Act's definition of an "individual health benefits plan" includes "a certificate issued to an eligible person which evidences coverage under a policy or contract issued to a trust or association, regardless of the situs of delivery of the policy or contract, if the eligible person pays the premium ...," even if issued to a student who fits the definition of an "eligible person." There is no exception in the IHC Act for student coverage that contains medical or hospital benefits beyond "accident only" coverage. "Accident only" policies are not "health benefits plans" under the IHC Act.
The IHC Board and the Commissioner recognize that students may face circumstances distinguishable from other eligible persons receiving coverage through trusts or associations: first, the financial constraints many full-time students face may make the purchase of a standard individual health benefits plan prohibitive; second, full-time students enrolled at institutions of higher education are required by law, N.J.S.A. 18A:62-15, to "maintain health insurance coverage which provides basic hospital benefits" while they are enrolled; third, such policies typically cover any student who wants coverage, regardless of health status; and fourth, the price for coverage is not based on a student's age, gender, or health status. Nonetheless, the IHC Board does not have statutory discretion to permit the sale of non-conforming individual health benefits plans for coverage of students.
The IHC Board, in conjunction with the Department of Insurance, believe that student accident and sickness coverage issued as group coverage through a policy or contract issued to a trust or association must be brought into compliance with applicable New Jersey law in an orderly and expeditious manner. The Department of Insurance has for several years approved policy forms issued to discretionary groups comprised of students at institutions of higher education. Such policies are issued directly to the institution of higher learning and are bona fide "group" health insurance policies under New Jersey law. A student covered by a group policy filed by the Commissioner of Insurance as an approved discretionary group would not be considered an "eligible person" under the IHC Act because the student is eligible for group insurance.
Accordingly, carriers that wish to continue to cover students1 must comply in the following manner with New Jersey law:
July 21, 1995
Ms. Melanie Ferrari, Executive Vice President
United Insurance Companies
4001 McEwen, Suite 300
Dallas, TX 75244
BY FAX
Dear Ms. Ferrari:
Thank you for your recent letter about student coverage and compliance with New Jersey law and Bulletin 95-05. Bulletin 95-05 did not change the law, it merely clarified that coverage of a college student by a certificate issued by a trust or association was subject to the Individual Health Insurance Reform Act, and had been subject to the Act since the passage of P.L. 1993, c. 164 on June 30, 1993. Further, the IHC Board first clarified this point in Joint Advisory Bulletin 95-01, which was mailed to carriers on March 3, 1995.
The purpose of Bulletin 95-05 was to explain to carriers by what means they could legally offer coverage to students. It did not provide immunity, amnesty, or otherwise "grandfather" existing non-conforming plans. I believe the language of the bulletin, which appeared in bold print, as below, was clear:
"Accordingly, carriers that wish to continue to cover students must comply in the following manner with New Jersey law:
While I recognize that you have negotiated contracts for the upcoming school year, I believe that you received adequate notice, through passage of the P.L. 1993, c. 164, and advisory bulletins sent to you as early as March of this year, to avoid the situation you are now in. In addition, the IHC Board and Department of Insurance have had numerous, extensive discussions with William O'Connor, of your company, dating back over a year with respect to the scope and meaning of the IHC Act and MEGA Life's compliance with the law.
As Bulletin 95-05 states, "the IHC Board does not have statutory discretion to permit the sale of non-conforming individual health benefits plans for coverage of students." I strongly recommend that you contact Paul DeAngelo, Director of Enforcement for the Department of Insurance, to discuss how to bring your current plans into compliance with New Jersey law.
Sincerely,
Kevin O'Leary
Executive Director
cc: Paul DeAngelo, NJ DOI
Gale Simon, NJ DOI
Leon Moskowitz, NJ DOI
Maria Smyth, DAG
1 - Students may be covered as dependents under their
parents' policies or as employees under an employer's
group policy. This discussion assumes that students
are not so covered.