As the name implies, short-term health insurance provides temporary coverage of up to one year per policy term for those who need quick and affordable health insurance. Although it doesn’t provide the same benefits as traditional major medical plans, short-term insurance can help bridge the gap when you’re in between plans and don’t want to be left without coverage.
What You Need to Know
Short-term health insurance policies provide quick and affordable insurance for those who need temporary coverage.
Short-term health insurance policies aren’t required to follow Affordable Care Act provisions and consumer protections.
Short-term health insurance policies typically are for less than one year, but often can be renewed for up to three years.
How Does Short-Term Health Insurance Work?
Short-term health insurance provides temporary medical coverage for a set period when you can’t use a traditional major medical plan. Keep in mind that this temporary health insurance typically goes to medical underwriters for approval. This means you’ll be asked a series of health questions, and you could be denied coverage based on your responses.
Can You Renew Short-Term Health Insurance?
Many companies do offer the option to renew a policy once it expires, but not always. For companies that do offer renewals, you can only renew your coverage for a maximum of 36 months. Some state regulations don’t allow renewals of short-term plans.
Can You Get Short-Term Health Insurance in Your State?
Not all states offer short-term health insurance plans. They’re not permitted in Colorado, Connecticut, New Mexico and Rhode Island, while California, Massachusetts, New Jersey and New York prohibit the sale of these plans if they don’t cover preexisting conditions. Delaware, Hawaii, Illinois, Maine, Maryland, Vermont and Washington state also maintain strict limits on short-term health insurance policies. Check your state’s policies to see what’s available.1
What Does Short-Term Health Insurance Cover?
Essentially, short-term health insurance is intended to provide coverage for three medical scenarios: doctor office visits, emergency care and hospitalization. Like traditional medical insurance, you may be required to pay a copayment, deductible or coinsurance to receive benefits.
With some policies, you may be limited to specific in-network doctors and providers. In those cases, the insurer often has negotiated rates with those providers for their services. Other insurers offer indemnity policies, meaning you’re not limited to a specific network of doctors and providers but you also don’t have negotiated rates for services. Instead, when using out-of-network providers, the doctor may charge you for a visit, your insurance will pay up to a specific limit, and you’ll have to pay the remaining balance due.2
What Does Short-Term Health Insurance Not Cover?
Unlike traditional medical insurance, short-term health insurance policies aren’t required to offer the full coverage mandated by the Affordable Care Act (or Obamacare). For instance, they don’t have to cover preexisting conditions. Nor are they required to cover ACA “essential benefits” like maternity care, mental health care or substance abuse treatment.3
Also, short-term health insurance generally doesn’t include prescription drug coverage, except possibly during a hospital stay. Instead, you may receive a discount card for prescription drugs.4
How Much Does Short-Term Health Insurance Cost?
Premiums for short-term health insurance policies vary depending on factors like age, gender and where you live, as well as the deductible, coinsurance and total policy coverage amounts. To give you an idea of a short-term health insurance policy premium, we compared rates for a 180-day economy policy for a 28-year-old single female in five major metro areas on pivothealth.com. Each policy has a $10,000 deductible, 30% coinsurance, $10,000 maximum out-of-pocket limit and total policy coverage of $100,000.
Who Should Consider Short-Term Health Insurance?
Short-term health insurance could be a great option for you in the following circumstances.
Waiting for Medicare to begin
If your existing health plan expires just months before your Medicare plan kicks in, temporary insurance plans could bridge that gap.
Not eligible for ACA premium tax credits
If you don’t qualify for subsidies for an ACA-compliant plan from the federal or state Health Insurance Marketplace, this could be an affordable option for basic medical coverage.
In good health without significant preexisting conditions
For those who don’t need a lot of healthcare, this could be a temporary alternative to traditional health insurance.
In between major medical coverage
If you’re changing jobs but your new long-term insurance won’t begin right away, a short-term plan could help in the meantime.
If you lose your job and employer-provided insurance, a short-term plan could offer lower-cost coverage while income is a problem.
If you’re no longer on your parents’ health insurance plan, you could qualify for an affordable temporary insurance plan until you finish school.
Waiting for employer-based coverage to begin
Even after you start a new job, you might have a waiting period before your benefits kick in. A temporary insurance plan can cover you until your employer plan starts.
If you are considering a short-term health insurance plan, it’s important to do your research first.
Who Should Not Consider Short-Term Health Insurance?
You need to think about your health needs and your budget. For instance, if you qualify for subsidies to purchase a plan in the ACA Marketplace, that could be a more affordable option with better benefits for you than a temporary insurance plan.
If you have a lot of medical expenses or expect to need maternity care, you could end up paying much more out-of-pocket. And if you have preexisting conditions, you probably won’t qualify for a short-term health insurance policy.
If you are considering a short-term health insurance plan, it’s important to do your research first. Find out what the policy will and won’t cover along with your out-of-pocket expenses for copayments, coinsurance and deductibles. Check if there are caps on out-of-pocket expenses and total policy coverage. Make sure there are in-network doctors and providers available near you. Finally, don’t forget this is a temporary insurance plan. You’ll need to be prepared to find other coverage when your policy expires.