Obamacare or Short-Term Health Insurance: Pros & Cons

Obamacare or Short-Term Health Insurance: Pros & Cons | HealthCare.com
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Obamacare and short-term health insurance plans have varying levels of healthcare coverage, and one may be more appropriate for your specific needs.

If you ever find yourself without healthcare coverage (maybe you lose your job or you lose coverage under your parents’ policy), you’ll find yourself with two options. Option 1: You can sign up for short-term health insurance. Option 2: You can find a plan offered through the Affordable Care Act (Obamacare). Before you rush into it, though, know that each option provides a very different type of healthcare coverage.

Take a look at the pros and cons of short-term health insurance and of Obamacare plans. Depending on your specific coverage needs, one option may make more sense for you than the other.

Obamacare Plans: Pros & Cons

While the passing of AHCA in the House has place more doubt into the future of Obamacare  – pushing various state health insurance exchanges into uncertainty – most states still offer a wide selection of options for healthcare consumers. Depending on where you live, you’ll have a variety of different plans (with different price points) to choose from. Each state works with different insurers, so plans vary state-to-state. The specifics of what is covered will vary based on provider and the level of plan you choose, but all will meet a certain level of care as mandated by ACA.

Obamacare Plan: Pros & Cons

Pros

  • Each plan offered through Obamacare must cover 10 essential benefits (including prescription drug coverage, mental health services, maternity care, and dental coverage for children);
  • Preventive services are covered under Obamacare, which will save you ample money down the line;
  • Subsidies are available to qualifying individuals to help cover the cost of health insurance; and
  • You can’t be denied coverage for a pre-existing condition (Obamacare is still the law of the land, after all).

Cons

  • For people who don’t qualify for subsidies, these plans can be pricey; and
  • You must purchase Obamacare coverage during an open enrollment period. If you miss this window, you must wait until the next cycle begins (except in the case of a qualifying event).

Short-Term Health Insurance: Pros & Cons

Short-term health insurance is a great temporary safety net when you’re unable to get coverage from another source or provider, or if you miss the open enrollment period for an ACA plan. But, as the name suggests, it isn’t a long-term solution. This type of plan offers limited coverage for a limited period of time.

“It’s not an ideal alternative to traditional health insurance, but for many it’s either a short-term plan or nothing,” says Josh Martin, principal and founder of Stout Hill & Company, a healthcare-focused consulting firm.

Pros

  • You’ll be able to get coverage quickly. You can register for this type of insurance in only a few minutes, and start being covered as soon as the following day;
  • You can specify the amount of time you will need coverage, and you won’t be roped into a policy for any longer;
  • The option to choose coverage for the specific things you need, so you won’t be paying for services that you never actually use; and
  • Premiums are lower than Obamacare and deductibles are generally lower as well (a few exceptions), and you’ll pay less than if you were uninsured and paying out-of-pocket.

Cons

  • It’s less comprehensive than a standard healthcare plan;
  • You can be denied coverage based on pre-existing conditions, or may be denied coverage to pay for treatments for those conditions – leading to much higher costs; and
  • You may still have to pay the Obamacare penalty.

Both of these options are still significantly less expensive than paying for health services out-of-pocket, so if you’re looking for healthcare coverage, you should put some consideration into either option.

The views expressed here are those of the author and do not necessarily represent or reflect the views of Healthcare, Inc. and HealthCare.com.

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Editor’s Note: This article has been updated to correct deductible prices on short-term health plans. 

Rachel Lustbader

About Rachel Lustbader

Rachel Lustbader is a graduate of the Sargent College of Health and Rehabilitation Sciences at Boston University, where she studied health science and public health. She has worked in multiple areas within the healthcare field, including biotechnology, pathology, and research project management. Rachel is a regular contributor to HealthCare.com.

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