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Are you considering purchasing a short-term health insurance plan? First, make sure you understand what they are and what type of coverage you’ll be getting.
Commonly referred to as short-term health insurance or temporary health insurance, short-term medical (STM) plans can cover you anywhere from 30 to 364 days. They offer consumers an affordable way to pay for healthcare for a brief period of time, and are often purchased when individuals experience a gap in coverage, or anticipate being uninsured for a short duration.
Just be aware that short-term plans don’t fulfil some states’ requirements for comprehensive health insurance and you may be penalized when you pay your taxes, depending on where you live.
Not All Short-Term Health Insurance Plans Are Alike
The exact coverage and benefits provided by short-term health insurance vary from plan to plan and depend upon the particular policy and insurance company issuing the plan.
1. Short-Term Health Insurance: Coverage & Cost-Sharing Arrangements
Short-term medical plans differ in the services they cover, although most STM plans cover (or partially cover) care related to unexpected illness and injury, such as doctor and emergency room visits, hospital stays, surgeries, x-ray imaging and other tests or treatments needed for emergencies. Be aware, however, that coverage for hospitalizations vary by plan and may be capped at a specific dollar amount.
Monthly premiums for short-term health insurance policies vary as much as the plans themselves, but they’ll typically still be lower in most cases than those of traditional health insurance plans. As you would expect, plans that provide more comprehensive coverage tend to be more expensive, and those that cover less services will be less costly. Most short-term plans have a deductible and charge coinsurance, but again, these amounts differ by plan.
2. Maximum Spending Limits
Insurers that issue short-term health insurance plans typically place a dollar limit on the amount they’ll pay for covered medical services, but that maximum amount, too, depends on the particular plan and issuing provider. Short-term medical plan spending limits can range from $100,000 to $1 million over the course of a lifetime.
3. Provider Networks
While some short-term health insurance plans limit policyholders to specific provider networks, most do not. People who have a preferred doctor are advised to find out if their doctor belongs to a particular provider network before applying for STM coverage.
Key Features of All Short-Term Health Insurance Plans
1. They Don’t Comply with Obamacare Regulations
The most important thing to understand with short-term plans is that unlike major medical plans regulated under the Affordable Care Act (ACA), they do not meet the minimum standards for insurance coverage laid out by the ACA. As such, STM coverage is much less comprehensive than coverage provided by major medical policies, which are ACA-compliant. In fact, 11 states do not even have short-term policies available.
STM Plans Do Not Cover Essential Health Benefits: Under the ACA, major healthcare policies are required to cover ten categories of essential health benefits, which includes maternity care, prescription drug coverage, immunizations, mental health services, and addiction treatment, among others. In addition, while some short-term plans do include coverage for prescription drugs, they almost always charge more for those additional benefits.
STM Plans Are Not Guaranteed Issue: Whereas ACA-compliant healthcare plans cannot deny coverage to people with pre-existing conditions, short-term plans require applicants to answer a series of medical questions before they can be insured. In other words, short-term health insurance plans reserve the right to refuse coverage or charge more to people who have pre-existing conditions. As a result, these plans are rarely available to people with diabetes or other chronic health conditions. If you fail to inform your insurer of a pre-existing condition, your insurer may terminate your coverage.
2. Short-Term Health Insurance Is Unsubsidized
Because short-term health insurance is not regulated by the Affordable Care Act, STM enrollees are ineligible for premium subsidies, regardless of their income level.
3. Plans Are for a Limited Duration
Like their name implies, short-term plans are meant to be temporary – they provide coverage for a limited period of time. Under new federal regulations, short-term health insurance plans are limited to a length of 364 days.
Those who want to extend their short-term coverage beyond 364 days will typically be required to re-apply for coverage at the end of their current insurance policy period. Some states may require you to reapply more frequently than once a year. Insurance providers can also deny renewals to any applicant, including applicants who have been approved for short-term coverage in the past.
4. You Can Enroll Whenever
While major medical plans require consumers to enroll during a dedicated Open Enrollment Period, it is possible to enroll in a short-term health insurance policy during any time of year. Because many short-term providers offer online enrollment, short-term coverage can take effect almost immediately. In some cases, coverage may begin as soon as your application is processed and accepted.
Tips for Selecting a Short-Term Health Insurance Plan
Tip 1: Look for Coverage That Meets Your Needs
It’s important to find temporary health insurance that meets your individual healthcare needs. If choosing your own doctor is important to you, look for a policy without a provider network. If you’re looking to reign in your monthly expenses, look for a policy carrying a lower premium. If you don’t like the idea of paying for healthcare out-of-pocket, look for short-term coverage with a low deductible. Prioritize your healthcare needs and look for a plan that comes closest to meeting your most important requirement.
Tip 2: Pay Attention to Financial, Business Ratings
An insurance policy is only as good as the company backing it. Before purchasing a short-term health insurance plan, research insurance providers. Check providers’ customer satisfaction ratings to gauge whether the insurer is responsive and helpful when policyholders are frustrated. You can look up an insurance provider’s Better Business Bureau rating (if it has one) to check its financial strength rating, which should give you an idea of the company’s financial wherewithal. Look for an insurance company with a financial rating of “B” or better to ensure you are placing your trust in a reputable company.
Tip 3: Check Plan Details and Fine Print
When comparing the costs of different short-term health insurance policies, ask for a detailed breakdown of your monthly premium, term deductible, coinsurance rate, and your out-of-pocket maximum. These figures will provide you with a better idea of what you’re paying for. Read your plan details carefully to determine what services the plan covers and what it excludes. Try to anticipate your family’s medical needs, so that you don’t end up paying for a plan with more coverage than you need, or not enough.
In Summary
Short-term health insurance plans may provide an affordable way to pay for healthcare when you experience a temporary gap in your usual coverage.
