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5 Things to Know About Temporary Health Insurance

Temporary health insurance - most commonly known as short-term health insurance - is a good alternative for immediate, temporary healthcare.

September 18, 2017 - By Colleen McGuire - read

When you’re in between long-term, major medical insurance plans, you pay 100 percent of your healthcare costs. Unfortunately, sudden illnesses, broken limbs and other situations that require immediate and costly medical attention won’t wait until a more convenient time. Temporary health insurance – more commonly known as short-term health insurance or short-term medical – can be a wise way to protect your finances in the meantime.

Whether you’re currently lacking major medical coverage, or you’re waiting for your new employer coverage, it may be worth your time to look into a more temporary health insurance option. These are the 5 most important things you need to know about short-term health insurance:

1. Short-Term Health Insurers Have Fairly Wide Doctor Networks

Consumers fear paying for health insurance coverage that doesn’t include conveniently located providers, and with good reason. Who wants benefits they can’t easily use? But short-term plans have a reputation for flexibility.

Most temporary health insurance options allow you to choose your healthcare provider—and nearly all doctors accept short-term health insurance plans. Before you receive care, check with the provider to be sure your insurance is accepted and check with your plan to see if there are any restrictions.

Some short-term health insurance plans include preferred provider organizations, known as PPOs, which will provide greater benefits for care received in-network. If you go out of network, you may pay more.

2. Short-Term Health Insurance Plans Are Cheaper Than Major Medical Plans

You will most likely pay far less for short-term health insurance coverage. Monthly premiums tend to be half the amount of major medical insurance – often less than $100 per month. Get a quote and see for yourself.

3. No Waiting Period; Coverage Can Begin as Soon as Next Day

Waiting periods and short-term health insurance do not belong in the same sentence. These temporary health insurance options were made for immediacy. Short-term health insurance coverage can begin as soon as the very next day — and, of course, later if you have another date in mind.

You can apply and enroll online in just a few minutes. Plus, you can tailor the policy length to your needs. Current federal regulations limit short-term medical plans to 364 days of coverage under one certificate of insurance. However, some insurers will allow you to apply for up to two additional new certificates of insurance for 364 days of coverage at one time, thus allowing you to have coverage beyond 364 days. State rules may vary. Each 364-day coverage period you apply for will have an effective date that starts the next day after a previous 364-day period of coverage expires.

4. Short-Term Health Insurance Has NO Tax Drawbacks as of 2019

Short-term plans are not the same as health insurance that was standardized by the Affordable Care Act. From 2014 to 2018, this meant that you would have to pay hundreds of dollars in tax penalties if you relied on short-term coverage for more than 90 days. As of 2019, this tax penalty has been repealed in every state except DC, NJ, and MA. You no longer have to pay a tax penalty for using short-term plans in 48 states.

The difference between short-term health insurance plans and long term, major medical insurance plans lies beyond policy length. Short-term plans are not comprehensive coverage. They’re not guaranteed issue, meaning that companies can chose not to insure you if you have a pre-existing condition.  They are designed to offer some financial protection from unexpected medical bills resulting from accidents and illnesses—the kind of medical bills that can be hard hitting. Covered care may include emergency care, surgical services, and hospital care, among others.

However, short-term health insurance can be a great solution when you are in between Obamacare plans—that month or year when you are uninsured and financially vulnerable. If you recently moved, need coverage during an employer-based plan’s waiting period, are switching jobs, just got divorced or are in any other situation that leaves you temporarily uninsured, a short-term health insurance plan can offer peace of mind.

If you can’t get comprehensive health insurance due to hardship or other circumstances, short-term health plans are an increasingly affordable solution for protection from unexpected medical bills.

5. Temporary Health Insurance Options Can Be Customized to Your Needs

Short-term health insurance plans include a wide range of benefits for emergency care, surgical services, hospital care and more. Coverage period maximums may run from $500,000 to $2 million or more, depending on the plan you choose.

You also have plan design options when buying short-term coverage. Deductibles range from as low as $1,000 to as high as $7,500. The general rule of thumb is: the lower your deductible, the higher your monthly premium; the higher your deductible, the lower your monthly premium. Coinsurance, copayments, and out-of-pocket limits vary by plan.

Taking the Next Steps

If you’re switching health plans, or looking for temporary health insurance to fill some immediate needs, it’s worth checking local short-term prices now.

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