Health Insurance for those ‘just in case’ moments!
Short-term health insurance is temporary health insurance designed to bridge coverage gaps between long-term health plans. However, with the rising costs of Obamacare plans some people are choosing short-term plans to replace their Obamacare coverage. Over the next four weeks we’re going to take a closer look at short-term health insurance to see who it’s good for, what coverage it provides, and whether short-term insurance really is a viable alternative to an Obamacare plan. Let’s start with the basics:
What is Short-Term Health Insurance?
Short-term health insurance is designed to be a “quick fix” for relatively healthy individuals and families. It allows you to still have coverage while you are in between life events or trying to find a long term health care plan that will fit your needs.
Short-term insurance is often only available for a short period of time—generally up to eleven months. Some states also allow you to “stack” more than one plan so you can have coverage for longer. Some plans, however, are not renewable. It works great for those who have missed open enrollment or do not have a qualifying life event that triggers insurance coverage.
The Affordability of Short-Term Health Insurance
One of the best features of short-term health insurance is that it is often much more affordable than long-term plans. It acts as emergency health insurance in case the unthinkable happens while you are in between long-term health plans.
For this reason, it is usually much more cost effective. In fact, it is often more cost effective even though the premium subsidiaries available for Marketplace health insurance plans are not available. Premiums for short-term coverage can be less than half of the premiums required for long-term coverage in some cases.
It can also save you from extremely expensive hospital bills if an emergency medical situation does occur while you otherwise would not have had health insurance.
Short-Term Health Insurance and the Affordable Care Act (ACA)
Short-term health insurance plans do not meet the requirements under the Affordable Care Act (Obamacare). That means that even if you have short-term health insurance, you are still subject to the penalties involved for not having coverage.
However, the current laws do allow a small gap in coverage (up to two months) without penalty. Short-term health insurance works great to fill this gap between plans, and you can still avoid the penalty.
What Does Short-Term Health Insurance Cover?
Because short-term insurance does not meet ACA requirements, it does not offer as many perks and features. For example, preventive care has been a huge focus for long-term health insurance plans under the ACA. Short-term plans do not offer the same types of benefits for preventative care that a long-term plan would. Instead of covering checkups, short-term plans cover emergency room visits.
Short-term insurance does not cover preexisting conditions either, which is something that qualifying ACA plans would cover. You may have to undergo a physical examination or fill out a medical questionnaire to receive coverage as well. It is possible to be denied coverage based on your past medical history or current health. This also means that if you have an ongoing condition that needs frequent medication or doctor’s visits, short-term insurance may not be much help for those types of situations.
Consider an example. Imagine that you have a heart condition. You take medication daily for your condition and you attend monthly doctor’s appointments. Your short-term health insurance would likely not cover your medication or your doctor’s visits. It also may not cover you if you have a heart attack caused by your heart condition.
What it will cover, however, is an emergency room visit that is the result of a lung problem, fall, or accident. Some plans may also cover the heart attack, visits, and prescriptions as well, but you may end up paying more for this type of expansive coverage. Given this example, it is easy to see why short-term health insurance may make a better gap filler than long-term solution.
Short-term insurance also likely will not cover maternity or mental health related medications or appointments. For some, this exclusion can be very important.
How Else is Short-Term Health Insurance Different?
The coverage limitations and the time that short-term insurance is available are the major differences between short-term coverage and regular health insurance. However, there are some other important differences as well.
- You may have to file your own claims. When you use most health plans, your insurance company will work with the hospital so that you do not have to see the vast majority of the paperwork involved with your health insurance claim. With short-term health insurance, some plans require that you report the claim and that starts their process. In some situations, that may also mean that you have to pay medical bills yourself and then the insurance company reimburses you.
- Short-term coverage starts quickly. Short-term plans often start much faster than standard health insurance plans. In many cases, you can be covered the day after you finalize your application. This can be a huge advantage for some.
- When your plan ends, you may not be able to get more coverage. You are limited in how long you can hold short-term health insurance and whether it can be renewed. Even after your short-term plan ends, you may not qualify to get long-term coverage until the next Obamacare Open Enrollment Period. You may still need to have a qualifying life event to get health insurance coverage elsewhere. Plan accordingly!
- You can drop coverage whenever you want. Although you generally choose how long you want your coverage to continue, you can also drop coverage without penalty in many situations as well. If your new standard health insurance will apply sooner than you thought, you can often just stop the short-term coverage.
While short-term health insurance has disadvantages it is a great safety net! Next week, in Part 2 of our series on short-term health insurance we’ll look at Omamacare vs Short-term plans.