The University of Missouri will stop providing subsidies to its graduate students to help them buy health insurance due to an IRS rule linked to the Patient Protection and Affordable Care Act.

While the PPACA levies a $2000-per-employee fine on large employers who do not provide health insurance for workers, a recent IRS interpretation of the legislation determined that employers are subject to even greater fines if they offer cash to employees in lieu of insurance. Those employers can be fined $100 a day—or up to $36,500 a year.

Facing the prospect of such heavy fines, the university will stop helping students pay for health care. Instead, it will direct the money towards fellowships to help grad students pay for tuition, books, housing and other expenses.

"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," the university said in a statement posted on its website.

In the past, the university only provided the money to the 70 percent of students enrolled in the student insurance plan. Because the money will now be available to all graduate students, the amount distributed to each student will be significantly lower, dropping from a maximum of $3,051 to a maximum of $1,240.

“We’re trying to comply with the interpretation of federal law,” Leona Rubin, vice chancellor of graduate studies, told the Washington Times. “We’re not trying to hurt (students).”

Unlike the provision of the PPACA that fines employers that don't provide employees with insurance, the fines for employers offering workers rebates to buy insurance does not include an exemption for small businesses. As a result, the National Federation of Independent Business is lobbying hard for Congress to craft a similar exemption.

Instant Insights /

University of Missouri to end student health care subsidies

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