Short-Term Health Insurance in Alabama

If you need Alabama short-term health insurance, you’re in luck! The Yellowhammer State has 10 companies that sell plans for any budget. 

What Is Short-Term Health Insurance?

Short-term health insurance is a type of catastrophic medical plan. It’s mainly designed for sudden healthcare needs, such as emergency room visits and doctor appointments for acute symptoms. It’s also called temporary health insurance or short-term limited duration insurance. These plans can only provide initial coverage for under 12 months.¹ 

The federal government lets states offer coverage to first-time enrollees for a maximum of 364 days with the option to renew for up to 36 months. But states can set their own rules for short-term policies.² Short-term health insurance in Alabama follows the federal guidelines. Policies for initial coverage in Alabama start at 30 days and go up to 364 days. After the term expires, you can renew for up to three years. 

How Much Do Short-Term Plans Cost in Alabama?

Alabama short-term medical costs vary by location, age, health status, and the company offering the plan. In Birmingham, monthly rates for a 35-year-old female start at around $112, according to search results from Pivot Health. Plans that have the highest deductible have the lowest monthly premium, and vice versa.

Below are the average costs for a 364-day policy in Birmingham, AL based on the demographic above.

• Premiums: Monthly premiums vary based on the deductible amount and the percentage of cost the plan pays after you’ve met your deductible. Alabama short-term policies often pay for 70% of covered costs, have a total policy coverage of $100,000, and an average premium of:
  • $112 per month for a policy with a $10,000 deductible 
  • $124 per month for a policy with a $7,500 deductible 
  • $136 per month for a policy with a $5,000 deductible 
  • $165 per month for a policy with a $3,000 deductible 

• Deductibles: Alabama short-term deductibles range from $1,000 to $20,000. Plans that have lower premiums tend to have deductibles between $7,500 and $20,000. Those with higher premiums usually have deductibles between $1,000 and $5,000.

• Copayment: Copays for Alabama short-term plans typically start at $50 for doctor visits, $75 for urgent care, and $250 for emergency room care. Plans that include prescription drug benefits usually have a $25 copay, and a maximum limit of $5,000 for covered drugs per person. Policies without drug benefits typically offer a prescription discount program.

• Coinsurance: This is the amount you’re responsible for after you’ve met your deductible. This is usually 20%, 30%, or 40%.  

How Do You Buy Alabama Short-Term Health Insurance?

Follow these steps to buy short-term health insurance in Alabama:

1. Assess your needs: It can be tempting to buy a low-cost short-term policy without checking what it covers. But think about your needs. Do you need insurance in case of a serious accident or injury, or to cover treatments for an ongoing condition? What about prescription drug benefits or maternity care? 

In most cases, temporary health insurance is best if you want the basics to help offset the costs of unexpected medical care. 

2. Compare plans: Private insurers sell Alabama short-term plans. Benefits, features, and prices can vary among companies. Before you buy a policy, you should know what’s covered, what your costs would be, and whether you can use your preferred providers. 

3. Research: Check each company’s reputation and financial stability. Here’s how:
   1. Look up reviews and ratings on social media or from the Better Business Bureau and ConsumerReports.org. 
   2. Check credit rating websites like ambest.com to see if your top picks have a good financial strength rating. That’s a good indicator that the company is stable and can pay claims.
   3. Contact the Alabama Department of Insurance if you’re having trouble finding information about a company or you want to verify whether it’s legitimate.

4. Balance your premium and deductible: A low premium usually means a hefty deductible. Conversely, a low deductible usually means hundreds in monthly premiums. A deductible between $2,500 and $5,000 should give you an affordable monthly payment and deductible amount. 

Where Can You Get Short-Term Insurance in Alabama? 

There are 10 companies selling short-term medical insurance in Alabama as of April 2020. They are:³

1. American Financial Security Life Insurance Company
2. Blue Cross Blue Shield of Alabama
3. Companion Life Insurance Company
4. Freedom Life Insurance Company of America 
5. Golden Rule Insurance Company
6. Independence American Insurance Company
7. National Health Insurance Company
8. Philadelphia American Life Insurance Company
9. Southern Guaranty Insurance Company
10. United States Fire Insurance Company

Is Alabama Short-Term Insurance Right for You?

Temporary health insurance may be your best option in these situations:

• You need low-cost, basic coverage: Short-term medical plans are usually cheaper than Affordable Care Act (ACA) coverage because benefits are less comprehensive. The cheapest ACA policy is usually a bronze plan, which covers 60% of qualifying costs. The average lowest-cost bronze plan sold on Alabama’s Health Insurance Marketplace cost $384 a month in 2020.⁴ Short-term policies in Alabama that pay 60% of covered expenses typically cost much less. 

• You want to buy coverage outside of the Alabama Open Enrollment Period (OEP): Unlike the OEP, which runs for six weeks once a year, you can enroll in Alabama short-term health insurance at any time. You could get coverage as soon as the next business day. 

• You’re in good health: You typically need to answer health questions when applying for short-term insurance. This process is called medical underwriting. If you have no preexisting conditions or current health issues, you’ll likely qualify for a policy. Keep in mind that if you develop health problems while enrolled, you may not be able to renew your policy. If this happens, you can try a different insurance company. 

• You need to fill a temporary gap in coverage: If you need basic health insurance to get by for a few months or even a year or two, enrolling in a short-term plan can help prevent high medical costs. Some of the most common situations to get temporary coverage are:
  • You’re between jobs
  • You’re waiting for new coverage to start
  • You’ve aged off your parents’ plan because you turned 26
  • You lost coverage from a former spouse’s plan
  • You missed the annual ACA enrollment and you don’t qualify for a Special Enrollment Period

When Are Alabama Short-Term Plans Not Right For You?

Here are some reasons why short-term health insurance may not work for you:⁵ 

• You have preexisting conditions or current health problems: Short-term medical insurance plans don’t count as minimum essential coverage. That means the ACA rules don’t apply to them. If you have a chronic condition (such as asthma, diabetes, or cancer), Alabama short-term insurance companies can reject your application. If you do get a policy, some companies may deny any claim related to a condition you had from six months to five years before your policy issue date. You can also face higher monthly premiums if you’re considered to be a risky applicant because of your health. 

• You want comprehensive coverage: While most short-term medical plans cover visits to doctors and specialists, lab tests, and emergency care, they don’t have to include all 10 essential health benefits in ACA plans. This includes mental health services, maternity care, prescription drugs, and rehabilitation services.

• You need help buying health insurance: About 94% of low-income Alabama residents who bought an ACA Marketplace plan in 2019 received subsidies (premium tax credits) to lower their monthly premium.⁶ But you won’t get government assistance to buy Alabama short-term insurance. The ACA only offers subsidies on minimum essential coverage sold through the Marketplace.  

If you’re looking at Alabama short-term health insurance, make sure it’s the right choice for you. You need to know you’ve got the right coverage at the right price before you sign up.