How Student Insurance is Regulated in the USA
Health insurance regulation in the United States is very complex, with many layers of regulation and required filings from federal and state authorities. However, for most international students, the analysis is pretty straight-forward and a full understanding of the daunting world of US health insurance regulation is unnecessary.
Affordable Care Act (ACA)
The ACA is a huge and complex healthcare reform law that went into full effect in 2014, and it requires all US citizens and certain US residents to maintain health insurance that meets ACA standards, or pay a fee with their tax return if they fail to carry qualifying coverage. ACA standards are very comprehensive, creating expensive plans that are often excessive compared to the needs of a typical international student.
Most international students are entirely exempt from the ACA and will never have to worry about complying or paying the fee for non-compliance. As long as you are considered a “non-resident alien” by the Internal Revenue Service (the IRS - the US taxing authority), you are exempt from the ACA. All international students are considered non-resident aliens, and therefore exempt from the ACA, for their first 5 calendar years in the US.
International students that are in the US for more than 5 calendar years should carefully review their situation to figure if and when they will be considered a “resident alien”, and therefore subject to the ACA. We have a detailed article addressing the impact of the ACA on international students , with links to the helpful IRS information on the subject, which is a good next step for more information on the ACA.
Summary: J1 and F1 students and dependents are exempt from the ACA for their first 5 calendar years in the US. After 5 calendar years, you must check whether you need to have ACA coverage.
The US State Department has established specific criteria for health insurance for J1 and J2 (dependents) visa holders, and therefore insurance at these levels is legally required. Those requirements are not overly burdensome, and include medical coverage of at least $100,000 per accident or illness, repatriation of remains of $25,000, medical evacuation or $50,000, a deductible no more than $500 per accident or illness, and the policy must be issued by an insurance carrier with an acceptable financial rating. Visit our J1 page for the full explanation of the requirements. Please note, new regulations go into effect in January of 2015, which will require higher limits for all J visa holders starting in May of 2015. Those new levels are explained fully here.
Finally, as noted above, if you stay in the US as a student for longer than 5 years on a J1 visa, you will need to determine whether you need ACA coverage.
Most international students in the US are on F1 visas, and their dependents would hold F2 visas. There is no particular health insurance requirement associated with the F visa, like there is with the J visa. However, most colleges or universities impose a health insurance requirement on their international students in order to enroll and register for classes. Since compliance with your school’s policies and staying properly enrolled and registered for class is a requirement of the F visa, and your school is in the position of monitoring and certifying that you are staying in valid visa status, in reality you must conform to whatever health insurance requirements are imposed by your school throughout the duration of your F visa status. The various ways schools handle insurance for international students is described below. In addition, if you stay longer than 5 calendar years, you will have to consider whether you need ACA coverage.
Most states do not apply an additional insurance requirement on international students. In Massachusetts, students should check whether they have become a Massachusetts “resident,” which is different than the IRS “resident alien” vs. “non-resident alien” analysis. Your school can help you with this analysis.
All international students must meet the insurance requirements established by their high school, college or university. Schools fall into various categories in how they handle health insurance for international students:
School Group Plan, Hard Waiver: All international students must enroll in the school group plan – typically only limited exceptions are made for sponsored students and students with coverage through their spouse’s employer.
School Group Plan, Soft Waiver: All international students must enroll in the school group health insurance plan. Students can waive out of the school plan if they show evidence that they have an alternate, comparable plan in place. Many students will buy their own individual insurance plan because it can be considerably cheaper than their school plan.
No School Group Plan: Many US schools do not have a group health insurance plan for their international students. In this case, each student must find their own individual policy, or the school may recommend or require a particular individual policy.
You can find out your school's insurance requirements by searching here. With this quick overview, we have strived to cut through the clutter of US insurance regulation, and provide insight only into those pieces of insurance regulation that impact international students – we hope it’s been helpful to you.
Curious about the US Healthcare System?
Return to our "Insurance Explained" section for more information and help