Close Coverage Gaps with Short Term Health Insurance
Short Term Health Insurance is designed for individuals who are without health coverage for a short period of time. If, for example, you missed the open enrollment period for the Affordable Care Act (also known as ObamaCare), a short-term health insurance can provide coverage for hospitalization and emergency care. It can also bridge the gap in coverage until you can get full-featured Individual Health Insurance. For instance, if you expect to qualify for employer-provided health care soon, plan to marry or anticipate any similar qualifying life event that would allow you a special enrollment opportunity, short-term insurance is a great option. You will have some much-needed protection against financial hardship in the event of an accident or illness.
Typically, short-term policies provide coverage for up to six months, although some plans may offer longer coverage. For example, if you have aged out of your parent-provided coverage, are waiting for another plan to start or are waiting for Medicare eligibility, it can provide temporary protection from accidents or unforeseen illness.
Short-term insurance does not provide the essential standardized benefits required by the Affordable Care Act. For example, short-term plans typically do not cover preventive care, routine physicals or preexisting conditions diagnosed or treated within the past two to five years, and renewal is not guaranteed. They may also come with lifetime limits on benefits — a provision healthcare plans that qualify under the Affordable Care Act cannot impose. Your actual coverage, deductibles and premiums will depend on the plan and carrier you choose. Because short-term insurance plans fail to satisfy the Affordable Care Act requirements, people who purchase them face the individual mandate tax penalty.
Short Term Health Insurance vs. COBRA
If you have recently left your job, you may be eligible for continuation of your group health plan under COBRA. COBRA is not the same as short-term health insurance coverage. Often, however – particularly in situations where your former employer picked up some or all of your health premiums – you may find your COBRA payments to be more than you can afford. In that case, the limited coverage provided by Short Term Health Insurance may be a viable solution. You should be aware, however, that short-term coverage can nullify your eligibility for COBRA or similar HIPAA plans.
Short Term Health Insurance vs. Qualified (ACA) Plans
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. So how short term health insurance vs ACA plans?
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.
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.
Things To Think About
What type of coverage do you need?
What is your age? Health characteristics?
What are your Short-term requirements?
Routine doctor visits and preventive care are probably not covered
The deductible can be high
There could be a waiting period
Policy requirements will differ between carriers
This is generally not “full coverage”.
A Word About Shopping For Healthcare
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