U.S. consumers will be able to enroll for health insurance coverage through their state exchange, the federal marketplace or a private marketplace beginning Sat., Nov. 15, 2014. However, just because you apply for coverage doesn’t mean you will immediately have insurance to pay medical bills. If you enroll before December 15, 2014, your coverage will begin January 1, 2015. If you enroll between December 16-31, your insurance effective date will not begin until February 1, 2015. Which means, from now until the your effective date for 2015 coverage, anyone who is uninsured and does not qualify for special enrollment will not have major medical health insurance.
What to do?
One of the easiest and most affordable options to cover your gap in insurance is short term medical, also known as temporary health insurance. Short term insurance is an option for up to 90 days of coverage (with the possibility of extension pending approval). While temporary insurance is not considered compliant with the Affordable Care Act’s essential benefits, the healthcare mandate does allow individuals to carry non-compliance coverage for up to three months without facing a tax penalty.
The short term alternative
Short term insurance is a viable option when you lack of coverage due to being in between jobs, waiting for group coverage to kick in from an employer, recently graduating from college, being a seasonal employee or temp, newly divorced, becoming independent from your parents or being laid off from your job. Additionally, coverage can become active in as short as 24 hours and typically cost one-third the price of major medical insurance coverage.
While it is a helpful option, there are several important factors to be aware of when signing up. Short term insurance will not cover any preexisting conditions and as mentioned before, does not qualify as minimum essential coverage by the healthcare law. Still, do the math and see if the cost benefits are in favor of providing a temporary solution, even if you have to pay a tax penalty versus no insurance coverage at all. Keep in mind that this plan may prevent coverage from other providers such COBRA.
Short term plan details
When choosing your short term insurance plan, there are several available in today’s insurance market. They vary in coverage and costs, just as widely as permanent plans. It is important to choose one that specifically suits your individual and/or family needs, as each and every situation is unique. One example of short term coverage requires a $50 co-pay. Deductibles can be quite high, but most insurance companies offer a number of options ranging between $500 and $5,000. There is also usually a maximum coverage limit which should be compared among providers.
All in all, when in between coverage, short term insurance plans are a viable alternative for making health care more affordable, as they state, in the short term.
Editor’s Note: This article was updated May 1, 2017 to reflect new federal limits on short-term medical plans.