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Schools May Not Need SAF to Pay for Insurance

Oregon joined Texas A&M, Florida State and Baylor as schools paying the premiums for disability/loss-of-value insurance for athletes. Wisconsin is also rumored to have joined this club as well. As more schools realize this is possible, more athletes will be aware that they could get such insurance and as some people have pointed out, the floodgates could open where this becomes a common occurrence.

But the problem with the current way schools are providing this benefit to athletes is that the money is coming from the NCAA’s Student Assistance Fund. In athletic departments that rake in and spend hundreds of millions of dollars per year, there is only a few hundred thousand dollars in their SAF distribution to go around. For one or two athletes, the $50,000+ premium is manageable with SAF, mostly because the schools were probably not spending SAF on something only SAF could pay for in the first place. But if it were even five athletes, that could easily be more than half the fund.

The solution would be to simply pay disability/loss-of-value insurance premiums out of a school’s budget. That may be something the power conferences take up early in their autonomous legislative process. But perhaps a school could do so right now.

The NCAA’s new interpretations philosophy is designed to give institutions more flexibility especially in the area of benefits for athletes. Using the application chart for the new philosophy, insurance premiums would fall under the category of “expenses arising due to participation in athletics.” That’s the same justification conferences are using to allow schools to use SAF funds to pay these premiums. That puts this in the green category of more flexibility. This is the standard we have to meet:

Categories in the left-hand column are those areas that are outside the intended scope of the legislation or areas where the legislation has been deregulated. Institutions have discretion to take action that a reasonable person would consider appropriate in light of the applicable rule(s) and the relevant circumstances.

The application document also gives use eight questions to ask about the proposed action to help determine if institutional discretion is appropriate. Since we’re in the green category, we should approach these questions with more flexibility, with an eye toward why a school could pay insurance premiums rather than why not.

  1. Do the circumstances at issue impact the immediate health or safety of a student-athlete? This is not an immediate health or safety issue.
  2. Do the circumstances at issue impact student-athlete success generally (e.g., personal or academic well-being)? Yes, especially when you consider Texas A&M paying for Cedric Ogbuehi’s insurance enticed him to return to school.
  3. Was the legislation intended to address the circumstances at issue? Perhaps, but there is no bylaw that explicitly says institutions cannot pay for disability/loss-of-value insurance, only the general rule on extra benefits.
  4. Do the circumstances require a consistent national standard (e.g., recruiting, eligibility, financial aid)? No. The action is not part of those categories and the NCAA will likely soon have different rules on benefits for athletes for different schools.
  5. Is the proposed action associated with a recruiting initiative? Only in the sense that everything is related to recruiting. But not a “initiative”.
  6. To what extent does the proposed action provide a recruiting, competitive or other advantage or benefit? Only to the extent that paying for the insurance helps an institution retain its best athletes and shows recruits it may be willing to do so for them.
  7. Is the proposed action an isolated or limited occurrence? Not isolated but limited to a small fraction of an institution’s athletes annually.
  8. Is there another way to accomplish the intended objective? Using SAF but that’s what we’re trying to avoid.

In the green category, this exercise seems to go in favor of paying for the insurance. Even if we say this action is in the yellow category because it provides more than a minimal benefit or advantage, the analysis still may end up in favor of allowing schools to pay the premiums if there is not an interp which expressly prohibits schools from paying these expenses for athletes. It is definitely not in the red category, so at least some flexibility should be allowed.

As this becomes more common, hopefully institutions will get more creative with paying for these expenses out of the general budget. SAF should be a last resort, especially when one athlete will use a significant chunk of the fund and a few might take up the majority of an institution’s distribution. If the new governance structure does not produce a bylaw explicitly allowing institutions to pay for these types of insurance, schools should make sure they are pushing the envelope as much as they can to leave SAF for the expenses that only SAF can pay.

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