The IRS is penalizing universities for providing healthcare to student employees, and it’s hurting the very people the Affordable Care Act was supposed to help.

In June Forbes reported that under new IRS regulations, starting in July 2015, small businesses and universities that reimburse employees healthcare premiums or pay their health costs directly will be fined up to $36,500 a year per employee. A penalty that is 18 times greater than the $2000.00 employer mandate.

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As a result, graduate students around the country are being told that they will no longer be provided healthcare as part of assistantships.  

This is a clear case where government intervention, far from improving the U.S. healthcare system, has actually made things worse. Universities were providing coverage for their graduate students prior to governmental intervention and now, under the Affordable Care Act, these same universities are being forced to cancel the insurance plans they provided to students.

The Affordable Care Act was supposed to encourage businesses to provide healthcare, not punish them for doing so.

This loss of healthcare will be increasingly felt by minority students, and graduate students with children.

According to the National Science Foundation there were over 600,000 graduate students in 2013. The National Center for Education Statistics has found that African-Americans are attending college now more than ever. The number of black graduate students was 13,426 in 2013, up from 7,632 in 2009.

In 2014 California’s University System admitted more Latinos than whites. And there are roughly 200,000 graduate students with temporary visas currently enrolled in U.S schools.

It appears graduate schools are opening their doors more and more to minority students, but the Affordable Care Act is making them renege on their promise to support their student employees.

Dropping healthcare benefits also adversely affects graduate students with children. Full-time graduate students at most universities are not allowed to work or make above a set amount of money per year. The average income of a graduate assistant is only $20,000 a year. These students will now be forced to purchase health care coverage previously provided as a fringe benefit.

The average cost for an individual Bronze Plan is $201 per month and the average family plan is around $600 per month. For a graduate assistant with a child this would be roughly $7,200 per year, over a third of their annual income.

It is also important to understand that not all graduate student work year round. Most graduate assistants are paid on a nine-month schedule.

If a graduate student does not get a teaching assessment then most do not receive a paycheck during the summer months. Prior to the new IRS rules, most universities would still cover the health costs of graduate assistants during the summer months (June & July) when they were technically working.

Dropping coverage for these students may not have been intentional, but clearly the government’s Affordable Care Act is hurting these students.

If the Affordable Care Act is supposed to help those who can not afford health care, namely low income Americans — who are disproportionately of a  minority status — then requiring universities to cancel care for a America’s graduate population is clearly a step in the wrong direction.

Forbes has reported that legislation is in the works to fix this issue, but as of as of July 1, half a million graduate students will potentially be without health insurance, and facing IRS penalties if they do not purchase plans with their already limited resources. For now, it seems that this is yet another of the many implementation problems plaguing the Affordable Care Act.

Davis is a Young Voices Advocate, and a graduate student at the University of Alabama.