Short-term Health Insurance

Short-term health insurance can provide temporary medical coverage when you are between health plans and outside employer or Affordable Healthcare Act (ACA) enrollment periods and would like some coverage in case of an emergency. Short-term health insurance is much less effective than long-term health insurance and, although having lower premiums, is relatively expensive for the level of coverage. Short-term health insurance coverage doesn’t have to meet the ACA requirements for minimum essential coverage, making it very limited if you and/or your family are not generally healthy or a pregnancy is possible during the time you’re covered by the policy.

Despite this, short-term health insurance is promoted as a less expensive alternative to the ACA marketplace health insurance policies. However, it is only appropriate to fill any gaps you might have between other types of health insurance, including those available through the ACA marketplace.

  • It is usually available any time you need through private insurance companies only, and can be canceled without penalties when you are able to get long-term insurance.
  • Short-term health policies are not available in 14 states,
  • 23 states allow you to purchase a plan for up to 364 days and be renewed twice. This is not guaranteed and you could be rejected if you develop a chronic medical condition.
  • The benefits covered are limited and may not be adequate for most people.
  • A short-term policy may have an annual or lifetime limit on what the plan will pay as opposed to an out-of-pocket annual limit for what you pay that other forms of health insurance may have.

You need to be sure you don’t have another health insurance gap when a short-term policy runs out and you can’t renew it, which is not a qualifying event for Special Enrollment in the ACA marketplace.

Although there may not be laws banning sales, short-term plans aren’t available in California, Colorado, Hawaii, Connecticut, New Mexico, New York, New Jersey, Maine, Massachusetts, Rhode Island, Vermont, and Washington

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Additional Details About Short-term Health Insurance

Short-term health insurance coverage is relatively limited and varies among insurance companies.

  • There are varying degrees of flexibility when it comes to providers, services, and plan duration.
  • Some plans allow you to see any provider and some are managed care (you pay less for seeing in-network providers).
  • Short-term plans typically cover some of the cost of doctor visits, urgent care, emergency care, and hospitalizations.
  • Some may offer preventive care visits and limited prescription coverage.
  • A few may cover vision and dental care. 
  • Be very sure you are aware of all the policies. limitations.

Short-term insurance plans feature the same types of out-of-pocket costs as other health insurance (i.e., premiums, deductibles, and coinsurance/copayments).

  • Premiums are lower overall than traditional types of health insurance. This is predominantly due to fewer benefits covered and the shorter duration of the policy. They can be a single payment if you know how long you will need coverage or monthly if you don’t.
  • Unlike other health insurance, premiums are affected by your health and can be very high if you are in poor health.
  • There may be a wide range of deductibles, but they are usually higher.
  • They are more likely to have a limit on how much they will pay for a given type of service, including specific treatments and hospital stays, especially if you are allowed to go to any healthcare provider.

Drawbacks to Short-term Insurance

The policies are not required to have the minimum essential coverage mandated by the ACA and often lack many of the benefits, restrictions, and cost limits of other health insurance. 

Short-term plans usually feature much higher deductibles than traditional health plans, coinsurance can be higher than the 40% allowed by the ACA, and your health can be taken into account when determining premiums and cost-sharing.

Costs can be changed at any time while you have your policy based on new information about your health. For example, if you get symptoms from and need treatment for a condition that has existed silently until now, such as diverticulitis or coronary artery disease, it could be considered a pre-existing condition and your costs may increase accordingly. The same is true of any condition you didn’t disclose on your application.

Most policies won’t cover maternity care, mental health, substance abuse treatment, or prescription drugs unless you’re hospitalized. Other uncovered services may include immunizations, joint replacement surgery, cataract treatment, hernia repair surgery, treatment for any injury incurred while you were intoxicated, injuries resulting from organized sports, acne or moles, and/or chronic fatigue or pain.

You will pay more out-of-pocket expenses. Your policy will have fewer benefits, reducing what the insurance company will have to pay. You are more likely to be responsible for charges above the amounts allowed by the policy (balance billing) if you go out of network or are free to go anywhere for your medical care.

There may be many other restrictions, such as only covering hospitalizations beginning during the week or waiting periods from when the policy starts to when it will begin to pay for certain treatments.

Read the policy very carefully to look for all these possible restrictions and more.

It is generally recommended that you avoid short-term policies unless you have no alternative. Insurance companies push these policies because they are not regulated and cost them much less to provide at a larger profit. Companies can save money by setting yearly or lifetime limits on what they will pay for your medical care, paying less of the cost-sharing (less than the 60% required by the ACA), setting higher deductibles, and limiting what they will pay for specific services.

If you qualify for Medicare but are only covered under a limited short-term insurance, you will pay late fees if you enroll in Medicare after your Initial Enrollment Period.

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