You may have heard about short-term health insurance, and it might have sounded like a great deal. For many Americans between jobs, short-term health insurance can be a boon, since it offers them private healthcare coverage for the most basic medical procedures. However, the critical point to note is that short-term health insurance was designed to be a temporary measure. You aren’t supposed to use short-term medical insurance for your long-term needs. Despite this, many providers offer financially attractive packages with cheap health insurance rates. The features of these healthcare plans may differ significantly from those designed for long-term use. In this article, we’ll delve into short term health insurance and its pros and cons, as well as what you need to do to qualify.
The Details of Short-Term Health Insurance
Short term health insurance might have a lot of different names. Different providers have their own terms for what is essentially a stopgap measure for someone who needs insurance but isn’t in long-term employment. They most often last for one year, but some states offer the option to extend coverage to three years. Healthcare insurance providers designed them to provide the most vulnerable with coverage when clients were between jobs or didn’t have a primary health insurance provider as yet. If you do decide to sign up for a short-term plan, you should ask your provider the details about what it constitutes and its cost over time. You’d realize in comparison that they tend to cost significantly more than long-term plans over their duration.
What coverage does Short Term Health Insurance Offer?
Based on the company you buy from, your coverage will vary. The regulations of the Affordable Care Act (ACA) don’t apply to these plans, which means you may be subject to higher premiums because of pre-existing conditions. ACA plans are also mandated to have individual coverage levels, but since short term insurance is exempt from the ACA, they don’t have to have the equivalent standards.
Typically, these plans cover emergency and urgent care visits, doctor’s visits, and preventative care. They may also cover prescription costs in some cases. Larger providers have an incentive for visiting their in-network doctors. The section in the agreement called “exclusions and limitations” defines what you should be aware of when buying into the plan. They outline what the insurance company does and doesn’t cover explicitly.
What Are the Positives of Short-Term Health Insurance?
Many short-term insurance providers have their own specific guidelines in their approval process that operate outside the standards set in place by the ACA. These guidelines usually mean that clients can get approved faster, with some approvals done immediately. It offers an affordable safety net for some people who may be in-between jobs. With the rising costs of healthcare, going without health insurance can deal a massive financial blow if you fall sick and are hospitalized. The terms are incredibly flexible, with plans ranging from 12 to 36 months in some cases.
These plans, since they’re temporary, usually allow holders to cancel the plans without prior notice. There aren’t any penalty fees for cancellation. For people who pay into these plans, the consideration for excess fees usually helps their financial situation. The flexibility of these plans means that you can generally customize one to fit your needs. Ask your insurance provider what the options are and choose from those provided.
The Drawbacks of Short-Term Health Insurance
There are always two sides to a coin, and there are drawbacks to paying into short-term insurance. These plans usually have significantly higher deductibles than the long-term health plans offered by the same providers. While the monthly premium is low, the deductible can make it difficult (if not impossible) to access your insurance. There’s also a lot more paperwork required, both for application and after any medical issue that the plan needs to cover.
Arguably, the most considerable oversight with short-term medical insurance is the lack of standards and direction. While the ACA removed using pre-existing conditions as a qualifier in long-term ACA approved plans, short term plans aren’t covered by the ACA. Some providers use that to reinstate the use of pre-existing conditions as a barrier to accessing this sort of insurance. There’s also a lot more limited coverage than long term plans. The lack of standards means that two similarly priced plans from different companies may differ significantly in what they cover.
What’s the Cost of Short-Term Medical Insurance?
You may not have to pay anything or a small fee for signing up. The actual costs of these short-term insurance plans come after you’ve bought into the plan. You typically pay a premium that may seem reasonable when compared to long term plans. However, attached to each short-term plan are coinsurance and copay fees, both of which only become apparent when you make your first doctor’s visit. Additionally, while the premium may be low, the deductible is exceptionally high compared to other plans. The coverage may also be heavily limited, meaning that the insurance company won’t even cover some doctors’ visits.
Should I Opt for Short Term Insurance?
Short term health insurance plans are designed for temporary coverage. If you missed open enrollment for a health plan, lost your job (or quit), or transitioned off your parents’ shared health plan, temporary health insurance is ideal. However, it isn’t designed to be a long-term sustainable solution for any adult. The high cost of deductibles and limited coverage could be dangerous in the long run. If you are on a short-term plan, you should try to shift into a long-term plan as soon as possible.
If you’re employed and meet the terms of ACA plans, then those would be the far better decision from an economic point of view. With the thousands of coverage options available, you can find one that suits your needs perfectly. My Private Health Insurance offers a complete searchable database allowing you to compare plans to see which is best for you. Contact us today to learn more!