Despite legal requirements to purchase Affordable Care Act-qualifying health insurance, not everybody is onboard. Many people, for a variety of reasons, are opting to purchase short-term health insurance policies instead. The plans typically offer bare bones coverage for accidents and unexpected illnesses at an affordable price for limited time period. Whether or not this temporary health insurance is right for you depends on several factors.
Drawbacks of Short-Term Health Insurance
- They do not satisfy ACA (also known as ObamaCare) requirements and therefore will not exempt you from the tax penalties.
- Benefits are limited. Short-term policies typically do not cover maternity care and may not include prescription drugs, for example.
- They generally require medical underwriting, which means, unlike ACA-qualified plans, you can be denied coverage because of your health history or current condition.
- Like the name implies, they are intended for short periods, only. Most are sold in one-month increments for up to 12 months, maximum. Others are available with maximum coverage periods, like three or six months. What’s available to you will depend on the laws of the state where you live.
- They are non-renewable, meaning when your coverage period expires, you’ll need to go through the application process all over again if you want to continue coverage. If you made a claim during the coverage period, it may result in higher premiums on a new policy period or that condition may be excluded under the new plan.
Advantages of Short-Term Health Insurance
- Short-term health insurance premiums are usually significantly lower than those of an ACA-compliant plan because the benefits are limited.
- They can provide peace of mind and help protect your finances in the event of a medical emergency or illness until you can get comprehensive care.
- Plans that lock in your premium rate for the duration of the coverage are available.
- Approval is typically quick, often within as little as 24 hours of submitting an application, and coverage can begin as soon as the day after approval.
Who Should Consider Short-Term Health Insurance
Temporary healthcare insurance may be a good fit for you under any of these circumstances:
- You missed the open enrollment period of an ACA-qualifying plan and need something to fill the gap until the next open enrollment.
- You’ve purchased a qualifying plan, but you need temporary healthcare insurance until your comprehensive plan goes into effect.
- You’re in between jobs that provide employer-sponsored healthcare plans.
- You’re a seasonal or temporary worker.
- You’re a college student who doesn’t have coverage under a parent’s plan.
- You’re an international student or a foreign national living temporarily in the U.S.
- You are exempt from ACA requirements, don’t qualify for Medicaid or Medicare and want some kind of coverage for yourself or your family.
- You will be eligible for Medicare soon and want temporary coverage to fill the gap.
Weigh the advantages and disadvantages. If you decide a short-term healthcare plan would meet your needs, compare polices and shop for temporary health insurance here.