Information About Student Health Insurance
Aug. 15, 2015
Last updated 4:30 p.m. Aug. 15, 2015
Due to changes in federal policy and IRS interpretation of that policy, general counsel has informed us that the University of Missouri no longer is allowed to pay for graduate students’ health insurance. (Previously, the university provided a subsidy to those students who opted in for insurance and were paid from a qualifying assistantship or fellowship). The IRS considers our student health insurance plan an “individual-market plan” rather than an “employer-sponsored plan,” such as our health plans for MU employees.
The Affordable Care Act prevents employers from giving employees money specifically so they can buy health insurance on the individual market. Graduate teaching and research assistants are classified as employees by the IRS, so they fall under this ruling.
Since we became aware of this change in policy in late July 2015, we have been working hard to try and create the best possible alternative for those students to whom we have made a commitment. During that time we:
- Contacted other universities to find out how they are addressing the change (since it affects other universities like ours);
- Contacted the Council of Graduate Schools and the American Council on Education for their opinion and interpretation;
- Reviewed the budget in order to find sufficient funds to offer alternatives to our students;
- Worked with our general counsel and HR to study how the rule applies to us.
Based on those reviews, we have decided to allocate one-time fellowships to all graduate student employees in qualifying HR titles. We will calculate the amount of the fellowships based on how many hours students work per week. These fellowships will be in addition to the stipends students receive from their academic units for work.
Because we are prohibited by law from linking this money to health insurance in any way, we are unable to ask students whether they need health insurance or plan to purchase insurance.
Graduate Student Health Insurance FAQs
Why did you eliminate the subsidy for graduate students?
Provisions of the Affordable Care Act do not allow employers to provide subsidies for their employees to buy insurance on the private market. Graduate students are classified as employees by the IRS, and student health plans, such as the one we have, are considered “private market plans.” Thus, we can no longer provide subsidies to student employees who purchase this insurance. This change affects all graduate students, current and new students.
Why did you wait until the last minute to tell us?
We became aware of this issue on July 21, 2015. We hoped the national groups lobbying on our behalf would motivate the IRS to issue an alternate ruling or exception for graduate employees. At the same time, we were working very hard to create an alternative plan to ensure all current and new eligible student employees would have additional resources at the start of the year for such additional expenses. We knew we absolutely had to have this in place by Aug. 15.
How did you notify students and departments about this change?
We sent a mass email to all registered students in the UM MU GRAD graduate list at 10:30 a.m., Friday Aug. 14. We know that some students may not yet be part of that list, so we sent a separate email with more details to every director of graduate studies, department chair and dean using the official Outlook lists for those groups. We asked them to reach out to their graduate students with this information, specifically new students who may not be on the university email lists. We also informed student leadership groups and faculty council and graduate faculty senate leadership.
Who is eligible for the additional stipend/fellowship?
Graduate student employees in the following job titles are eligible for the stipend/fellowship:
- Graduate Teaching Assistant (4717)
- Graduate Research Assistant (4715)
- Graduate Instructor (4685)
- Graduate Library Assistant (4690)
- Graduate Fellow (4680)
The position and the student must meet the eligibility criteria for a tuition waiver to also be eligible for the stipend/fellowship. These titles and the job codes associated with them may qualify you for a tuition waiver.
How much will the stipend/fellowship be?
The amount will vary depending on whether you are a domestic students or an international student and the amount of your FTE (full-time equivalent appointment).
- Domestic students on assistantships or fellowship will receive $1,240 if they are 0.5 FTE and $620 if they are 0.25 FTE.
- International students will receive $709 if they are 0.5 FTE and $620 if they are 0.25 FTE.
Will we receive another stipend/fellowship in the spring?
No. This is a one-time payment for the 2015-16 academic year.
My subsidy was $3,051. Why is the stipend/fellowship less than what I was promised?
In the past, we provided subsidies only for the students who enrolled in the student insurance plan. Data analyzed from the past three years indicated only 70 percent of eligible students actually enrolled in the insurance and received the subsidy. However, we now need to distribute the same amount of money over the entire population of eligible students, thus reducing the amount we can provide to each student.
How did you determine these amounts, and why are domestic and international different?
We wanted to ensure that all students had the resources to meet their needs, including optional insurance costs at the start of the fall semester. We used the cost of the fall semester student health premium as an indicator value to determine what each student should receive. Premium costs for international students are less than those for domestic students. Therefore, the amount of the stipend/fellowship was calculated to be less. Stipends and fellowships across campus vary greatly from student to student and from one academic unit to another.
Will international students still be required to enroll in student health insurance?
Yes. Many of our international students have visa requirements that specify they must enroll in a health insurance plan. These students will be automatically enrolled in the student health plan. However, unlike in previous years, international students in qualifying titles must pay for the insurance. The cost will be $1,685 for the year or $709 for the fall semester.
How and when will I receive the stipend/fellowship money?
Over the next week we will generate a list of current eligible students. Your departments notify the Office of Graduate Studies when they place you in a qualifying-student title. Some of these positions have not yet been filled. Your payment will then be processed and added to your account. It may require an additional week to get this completed but be assured you will receive this money.
Will the stipend/fellowship be taxed?
Most likely the stipend/fellowship will be considered taxable income similar to other forms of fellowships and compensation. However, the tax rate for most students is such that this additional amount will have minimal impact on your tax burden.
Can I still buy the student health insurance?
Yes. Any student may purchase the student health-insurance plan. The student health plan and the use of the Student Health Center will not change. Only the subsidy that the university provided to purchase the insurance is being eliminated.
If you are a domestic (U.S.) student, you may purchase full-year coverage for $3,051 or fall-semester coverage for $1,240.
If I have other insurance coverage through my spouse or parents, do I need to enroll in the student health plan?
Enrollment in the student health plan is not mandatory. You are encouraged to select the health insurance plan and policy that best suit your needs.
How can I enroll in the student health plan?
You can enroll directly through the Aetna website and pay the premium cost to them by their Sept. 11 deadline. You also may enroll through myZou, and the bill will appear on your myZou account. Instructions for enrolling in a student health plan are available on the Office of Graduate Studies website. Fall semester and annual coverage began Aug. 15. If you enroll after Aug. 15 but before the Sept. 11 deadline, coverage is retroactive to Aug. 15 for domestic students and Aug. 1 for international students so that current students who enrolled before the deadline can maintain their coverage. Fall semester coverage ends in early January.
I enrolled in the student insurance for the fall semester early in July, and the subsidy was applied to my myZou account. What happens now?
The subsidy amount will be withdrawn from your myZou account. If you wish to change your insurance options, you may do so until Sept. 11. If you do not change your selections, you will be billed for the insurance.
The deadline to pay my bill in myZou has passed, but I haven’t decided what to do about the insurance costs. Will I be charged late fees?
We have informed the Office of Cashiers of the challenges and difficulties surrounding the student insurance decisions. The office will work with students to help avoid any fees due to insurance costs.
Why are students not allowed to receive employee health insurance like all other university employees?
Employee health insurance plans are only available to full-time, benefit-eligible employees. Part-time employees, regardless of whether they are students, are not eligible to purchase this benefit.
I am paid by a grant to my adviser. Will I still get the stipend/fellowship?
Yes, you will receive the stipend/fellowship.
Will my adviser’s grant be charged for this stipend/fellowship?
No, it will not be charged for this stipend/fellowship. Previously, the university provided a subsidy for your health insurance and then charged the grant for the cost of this subsidy. The grant will no longer be charged for your health insurance subsidy or the stipend/fellowship.
Can the grant pay my insurance premiums?
Technically, yes, the grant can pay the cost of your insurance premium through sponsored billing. We are not aware at this time of any rules that prohibit this, but your adviser should check with the Office of Sponsored Programs.
What will happen to students who had planned on having their health insurance covered? What are you doing for students?
All graduate student employees will receive additional fellowship funds that they can use to cover incidental costs associated with their education, such as books and course fees, thus freeing up money they may use to pay for their individual insurance plans. These funds are in addition to their existing departmental stipends or fellowships.
We will calculate the amount of the fellowships based on the amount of hours students work per week (whether they have a half- or quarter-time appointments).
We are prohibited by law from linking this money to health insurance in any way, so we cannot ask students if they need health insurance or plan to purchase insurance.
Graduate students also are able to access the MU Student Health Center, which is covered by their student fee.
So, what are students supposed to do to get insurance?
Students can continue to purchase insurance through Aetna’s Student Health Insurance Plan. They can purchase insurance from the ACA Exchange/Marketplace or through other sources. Although open enrollment for the ACA Exchange does not begin until November 2015, students losing coverage in August can enroll during a special enrollment period based on their loss of coverage.
We are prohibited by law from advising students on health insurance choices, but we are providing them with resources so they can make the best decisions for themselves.
Graduate students also are able to access the MU Student Health Center, which is covered by their student fee.
How many students purchase student health insurance? Why are you offering fellowships to all students including those who did not opt-in for insurance?
Seventy percent of eligible student employees purchase student health insurance.
We are prohibited by law from linking this money to health insurance in any way, so we cannot ask students if they need health insurance or plan to purchase insurance; therefore, the funds will be distributed to all eligible graduate student employees.
Does this apply to graduate students who aren’t employed by the university as RAs or TAs?
We only provide subsidies to those students employed in certain titles such as teaching assistant, research assistant and library assistant. These are students who also are likely to be qualified for tuition waivers.
Since the fellowships are to be used for “incidental fees,” could students choose to use the money for health insurance?
All eligible graduate student employees will receive additional fellowship funds that they can use to cover incidental costs associated with their education, such as books and course fees, thus freeing up money they may use to pay for their individual insurance plans. However, we cannot tie any stipend or fellowship we grant to students directly to insurance payments. These funds are in addition to their existing departmental stipends or fellowships.
How are other universities handling this?
Many are still confused regarding the ruling or are in the discussion stages. Some schools have unionized graduate organizations and will require union negotiations. Some have decided to eliminate the subsidy entirely. At least one that we know of is replacing the subsidy with a fellowship for this year.
Will you offer additional fellowships to incoming graduate student employees in the future, or is this a temporary fix?
It is difficult to know what the final outcome will be around this federal rule. Several major educational organizations are lobbying on behalf of higher education and graduate students such as the Council of Graduate Schools and the American Council on Education.
How much money did this cost the university? What were you originally paying them for insurance, and how much additional money was needed to give the fellowships? Where did this money come from?
The budget office last year allocated $3,183,000 for insurance subsidies but spent $3,938,793 with an additional $218,44 for this summer session on health insurance subsidies for graduate students. The cost of the current fellowships will be approximately $3 million. The current cost is an estimate because we do not have the full enrollment numbers this early in the semester.
As with any additional expense to the university that comes up unexpectedly, the chief budget officer must reallocate funds from other entities to cover this expense and/or use the university’s reserves. In this particular situation, the additional money was reallocated from a combination of other sources.
What will happen to the university if we don’t do this?
We will be fined $100 per day per student for not following IRS guidelines.
I have a contract that says that MU will provide health insurance. Is this a breach of contract?
Breach of contract claims will need to be analyzed on a case-by-case basis by university attorneys.
How many total graduate students are there who will received the fellowship?
We don’t have the final enrollment numbers or the number of students that academic units will place into qualifying titles.
How much is the fellowship?
- Domestic Students at 0.5 FTE will receive $1240
- Domestic students at 0.25 FTE will receive $620
- International students at 0.5 FTE will receive $709
- International students at 0.25 will receive $620
The difference in cost by student group was based on what the original cost of the insurance would be for those student groups for fall semester.
How many students were receiving the stipend to pay for insurance, and how much were they receiving?
In 2014, approximately 3,100 received the subsidy at a cost of nearly $4 million cost to the University. The subsidy for the entire year (2 semesters and summer) was
- Domestic student at 0.5 FTE $3051
- Domestic student at 0.25 FTE, $1525
- International student at 0.5 FTE, $1685
- International student at 0.25 FTE, $1525
How much will it cost to give all students a fellowship equal to the current subsidy for insurance?
The Announcement of a Graduate Student Insurance Task Force
can be found on the Chancellor's site