Why a Strong Waiver Policy is Essential for a Successful International Student Insurance Group Plan

Posted on Monday, October 14th, 2024 at 4:34 pm

As school administrators, the well-being of your international students is a top priority, and a key part of that is making sure that students have access to a comprehensive yet affordable health insurance plan. Many institutions offer group insurance plans for their international students, but one critical piece that often doesn’t get the attention it deserves is the waiver process. The ability for students to waive their school’s plan in favor of an alternative insurance plan might seem like a good way to offer flexibility, but if not carefully managed, it can significantly impact the performance and sustainability of your school’s group plan.

Why Your Waiver Process Matters
When establishing a group insurance plan for your international students, it’s important to think carefully about what your waiver requirements will be. The goal should be to protect your institution, the integrity of your group plan, and the health of your students. Allowing students to easily waive your school’s plan can result in what is known as adverse selection, which can destabilize your insurance plan, create an unhealthy smaller pool, and lead to higher costs.

Understanding Adverse Selection

Adverse selection occurs when students who anticipate needing more medical care—perhaps due to ongoing health conditions—choose to stay on the school’s group plan, while healthier students opt to waive out and seek cheaper alternatives. If the waiver process is too lenient, the risk to your group plan increases significantly.

Here’s how it works:

• Healthier students may waive the school’s plan, finding a cheaper insurance option because they believe they won’t need a more expensive, comprehensive plan.
• Students with medical conditions will stay on the group plan because they know they will need medical attention.

This leads to a smaller, higher-risk insurance pool, resulting in more claims and higher costs for the school’s plan. The consequence? When it comes time to renew the policy, your premiums could increase significantly, and the plan may become unsustainable in the long run.

Setting Strong Waiver Requirements
To avoid adverse selection, it’s important to set rigorous waiver standards. This requires that students are only able to opt out of the group plan if they have comparable or higher coverage. Here are some best practices for setting waiver requirements:

1. Require comparable or higher coverage: All approved waivers need to meet certain insurance minimums. These might include specific coverage levels for overall coverage, out-of-pocket amounts, mental health services, and wellness care.
2. Mandate that claims be paid in the US: International plans often lack a U.S. provider network and may only cover students through reimbursement. This forces students to pay high medical bills upfront, leaving them and providers at risk.
3. Enforce strict deadlines: Have clear deadlines for waiver submissions and require thorough documentation, such as proof of coverage and plan details. All documentation should only be evaluated in English.
4. Educate students: Inform students about the risks of opting for cheaper, inadequate coverage. Many international students might not fully understand the complexities of the U.S. healthcare system and could end up underinsured.

Mandated Group Plan With No Waiver Option

Alternatively, you may choose to require a group plan with no option to waive. This requires that all students are covered by a robust plan, and in the event of an emergency, your staff knows exactly what to do and whom to contact. This approach also minimizes the administrative work of evaluating waiver requests and simplifies student education on how to navigate their plan in the US.

For many colleges and universities, a group insurance plan is the best way to ensure that international students have access to the care they need while in the United States. However, allowing international students to waive the school’s plan without stringent requirements can lead to adverse selection, higher claims, and increased renewal rates. By setting clear, rigorous waiver standards (or eliminating the option to waive), you can protect the health of your students and the stability of your group plan.

If you are interested in exploring group plans, please contact us for more information and to obtain a quote.