The Departments of Labor, Health and Human Services and the Treasury (collectively, the “Departments”) on Friday extended enforcement relief, via publication of FAQs About Affordable Care Act Implementation Part 33 (“FAQs”), to higher education institutions for arrangements that provide reduced or no-cost student health insurance coverage.

Student health insurance is a type of individual coverage offered to students and their dependents, typically through a contract between a higher education institution and an insurer. Many higher education institutions provide student health insurance to students at no cost or a reduced rate in an effort to make coverage more affordable for students. For students who perform services for the higher education institution, these arrangements raise compliance issues under the Affordable Care Act (“ACA”).

The Departments have interpreted the ACA rules as prohibiting arrangements classified as employer payment plans, which are group health plans under which an employer provides a reimbursement for some or all of the premium expenses for individual health insurance or a policy issued on the Marketplace Exchange. Without relief, the practice of paying all or a portion of the premium for student health insurance coverage could violate these rules if the arrangement covered a student providing services to the higher education institution.

On February 5, 2016, the Departments issued guidance indicating that they would not take enforcement action against a higher education institution merely because the institution provides a premium reduction for student health insurance coverage for a plan year or policy year beginning before January 1, 2017. Since this relief did not extend to plan or policy years beginning after December 31, 2016, it was not clear whether premium reductions for student health insurance arrangements would be permitted after 2016.

In the FAQs issued this past week, the Departments advised that the enforcement relief provided on February 5, 2016 would be extended indefinitely until the Departments issue further guidance. Therefore, for plan and policy years beginning after 2016, higher education institutions may continue to offer premium reductions for student health insurance arrangements, whether self-funded or fully insured, without concern that the Departments will take enforcement action.