The Affordable Care Act sets a high bar for private health insurance plans. Qualified health plans under the ACA must cap expenses, guarantee acceptance and renewal, not consider pre-existing conditions, and be offered to a nationwide pool. These requirements mean that private health insurance plans available on the national exchange are not so cheap.
Short term health insurance plans, on the other hand, avoid ACA requirements by offering policies for less than 365 days. Usually, these plans last about 6 months, but any health insurance policy with a life of less than 12 months is considered a short term medical insurance plan. Some consumers might find these plans an attractive alternative to pricier qualified health plans. But these more affordable short term health insurance plans have their downside as well.
Short Term Health Insurance: Cash Saver or Siren Song?
A short term health insurance policy might be ideal for a younger person who doesn’t have or anticipate substantial health care needs. These plans generally cover major medical and hospitalization, but not regular doctor visits or prescriptions. These short-term plans might be attractive to people who don’t qualify for government subsidies—in other words, unmarried people who earn more than $44,000 per year.
Obviously, for less comprehensive coverage, you would pay less money. One plan offers short term medical insurance for a 40-year-old male for about $114 per month, compared to the lowest-cost Bronze plan through healthcare.gov that costs about $230 per month. Another short term plan offers a $5,000 deductible, compared to the $6,300 deductible in the lowest-cost Bronze plan.
But short term health insurance plans have a downside that should be carefully considered. First, these plans lack comprehensive coverage, which could leave consumers underinsured in the event of a serious health crisis. You must also pass a medical underwriting test to get a short term health insurance policy, so if you have a pre-existing condition, you probably won’t be able to afford short term medical insurance.
Short Term Insurance Plans Offer an Alternative for Some Consumers
Affordable short term health insurance plans might be a viable alternative for certain consumers. If you are younger than 50, have no family history of health problems, and have a comfortable income, you might want to consider a short term medical insurance plan.
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