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Does Short-Term Health Insurance Cover Essential Benefits?

While short-term plans provide some level of coverage for essential health benefits, remember that it's only temporary.

October 4, 2017 - By Hal Levy - read

Traditional health insurance plans (“major medical health insurance”) must help you pay for ten essential health benefits guaranteed under the Affordable Care Act. Short-term health insurance doesn’t cover these benefits very well. In fact, temporary health insurance coverage is under no obligation to offer any specific benefits.

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Temporary Health Insurance

Short-term health insurance (also “short-term medical” or “temporary health insurance”) can safely get you through a variety of temporary situations. However, short-term insurance isn’t designed to compete with major medical health insurance when it comes to taking care of your ongoing medical issues. Short term plans are a throwback to the time before Obamacare plans – they’re cheaper, they can reject you for health reasons, and they don’t cover everything.

If you’re considering short-term health insurance, you probably understand that your coverage will be limited compared to what you’d get with a major medical plan. Different short term plans will cover Obamacare’s 10 essential health benefits in different ways. Just don’t expect short-term medical to take care of your long-term needs; these plans are made to serve as temporary health insurance.

Short-Term Health Insurance and Essential Health Benefits Coverage

Below, we’ve listed all ten of the Affordable Care Act’s essential health benefits. We’ve also detailed whether or not short-term health insurance plans will cover each of the benefits.

1. Chronic Disease Management, Preventive Care, and Wellness Services

Checkups: Most short-term health insurance plans will offer you at least one doctor’s checkup at a low cost during your plan. The amount of your copayment, and whether or not a wellness visit will count towards your deductible, depends on the rules of your chosen plan. The cost will probably be much less than if you had paid on your own.

Chronic Disease Management: Short-term health plans generally won’t cover treatment for a pre-existing condition. If an insurer does agree to cover you despite a serious pre-existing condition, the plan will refuse to pay for anything related to that specific condition. Management of long-term chronic diseases like diabetes or lupus won’t be covered by your temporary policy.

2. Outpatient Care

Doctors: Care from general practitioners and medical specialists is a staple of short-term health insurance plans. While doctor availability will be subject to your insurer’s rules, short-term plans typically have very large doctor networks.

Payment policies for doctors will differ depending on the rules of your plan. You could be on the hook for small copayments at first, before having to pay the full cost after a limited number of visits. Conversely, you could be subject to copayments or full costs until you reach the plan’s out-of-pocket maximum. The total monetary value of your benefits may also be limited.

Outpatient Surgery: Same-day surgery for a new medical condition will probably be covered. There will probably be reasonable limits to the amount your plan will pay. You can discuss costs with your doctor in advance to work around any restrictions. Some of the most common medical conditions will probably have more specific coverage guidelines.

3. Emergency Services

Emergency Care: You shouldn’t expect to be penalized for going out-of-network due to an urgent and serious health issue. There may be a cap on the amount your plan pays for an individual ER visit. As with traditional health insurance, having temporary health insurance  should encourage you to seek treatment in a medical emergency.

Ambulances: Medical transportation will probably not be covered by your short-term insurance.

4. Inpatient Hospitalization

Short-term insurance is designed to let you get emergency hospital care without suffering from ruinous costs. Once you’re admitted to a hospital, your costs will generally be covered by your plan. There will likely be limits on the amount your plan pays for specific services.

Your hospital care won’t be free. You’ll probably have a considerable copayment if you’re admitted to the hospital. However, the ultimate cost of your care will be limited to your plan’s out-of-pocket maximum.

You will want to let your doctors know that you’d like to avoid “surprise bills” for out-of-network care, just like you would with an Obamacare plan. Although most doctors and services will be covered, there will be certain doctors or services that are incompatible with your plan.

5. Laboratory Services

You’ll be able to get referrals from medical professionals for laboratory services in the same manner as traditional health insurance. However, the costs of outpatient laboratory services, like blood tests and x-rays, probably won’t be covered by your short-term insurance plan.

Some plans will cover the cost of lab services while you’re in inpatient care, while some will only pay for your doctors and room costs if you’re in the hospital.

6. Prescription Drugs

You’ll be able to get prescriptions from a doctor, and fill the prescription out-of-pocket at any pharmacy you choose. Your temporary health insurance provider will probably give you the option to utilize a discount prescription service as well.

Short-term health insurance plans usually only pay for drugs in an inpatient hospital setting. A plan can create its own rules as to which brand and type of drugs qualify for coverage.

7. Mental Health and Substance Use Disorder Services

Inpatient Care: A limited amount of inpatient treatment will probably be covered by your health insurance plan. There may be limits on the amount your plan pays each day. If you are in inpatient treatment, your drug costs will most likely be covered.

Outpatient Care: Short-term insurance generally covers outpatient mental health treatment. Unlike Obamacare plans, they do not have to be covered in a comparable manner to doctors. The coverage rules depend on your plan and would likely have a copayment and a limit on the number of visits.

8. Rehabilitative or Habilitative Services and Devices

Rehabilitative Care: Coverage for rehabilitation varies widely depending on the plan you choose and the specific care you seek. Some rehabilitative specialists will be covered by your plan, particularly if it results from an injury sustained during the time of your plan.

Habilitative Care: Services that help with learning a new skill are pre-existing by definition, and probably won’t be covered.

Medical Devices: Durable medical equipment to help you heal or overcome a condition probably won’t be covered by your plan. Basic devices given to you from a doctor or hospital, like a cane or resistance band, might be covered.

9. Maternity and Newborn Care

Maternity: One of the more controversial health benefits mandated by Obamacare, maternity services will almost certainly not be covered by temporary health insurance. Since short-term health insurance plans only last for a maximum of 90 days, they are not equipped to offer coverage during a 9-month pregnancy. Some expectant mothers might choose a short-term plan to cover their medical costs if their pregnancy is financed separately.

Newborns: Since short-term insurance plans generally exclude newborns from their policies – even when they insure other young children as part of a family plan – newborn care won’t be a part of your short-term health coverage. Your hospital will be able to direct you to specific assistance programs for newborn children.

10. Pediatric Services (Including Oral and Vision Care for Children)

Your family may be covered by by short-term health insurance. Many companies also sell standalone dental and vision care plans. However, short-term medical plans don’t offer additional child-only benefits for children like Obamacare plans would.

The Obamacare Penalty and Short-Term Health Insurance Plans

If you compare health insurance plans before you buy, you’ll have a better idea of what’s covered. Short-term health insurance plans may look similar to other forms of health insurance, but they won’t operate in the same way when it comes time to pay. If you decide to go with a short-term plan, you’ll need to pay the Obamacare penalty when tax time comes around.

Since short-term health insurance plans don’t guarantee coverage for all essential health benefits, you will be subject to the Obamacare penalty.

How to Avoid the Obamcare Penalty:

  1. Instead of a short-term health insurance plan, enroll in a major medical plan (either a plan offered on the ACA Marketplace or a non-Marketplace plan);
  2. Have coverage through faith-based healthcare; or
  3. Qualify for the Marketplace affordability exemption. This is only available to you if the lowest-cost Bronze plan on the Marketplace is considered unaffordable based on your household income. What’s considered “unaffordable” is defined by the federal government. Read more about Marketplace affordability exemption.

Taking the Next Steps

When buying temporary health insurance, take a close look at your benefits, whether or not you expect to use them. Make sure you have your coverage details on hand in case you do have to navigate emergency services.

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