When life leaves you without a health insurance plan, short term health insurance offers protection from the unknown, which could include staggering medical bills.
Short term insurance, also known as temporary health insurance, is a quick and easy option because you do not need to apply through the government health exchanges. Typically someone can enroll in a short term insurance plan in under 10 minutes from many online health insurance retailers like HealthCare.com. Costs are often about half of the price of permanent, major medical health insurance.
As a low-cost bridge to your next health plan, a short term policy provides limited coverage for a limited period of time, usually between 30 to 364 days, depending on your state of residence.
Short term health insurance has traditionally safeguarded people between jobs or those waiting for coverage to begin under a group plan. With the launch of Obamacare, short term health insurance is a great solution for consumers who need coverage between the enrollment period and the start of their Obamacare health insurance plan.
Fifteen states limit the coverage period of short term policies to a maximum of six months. All other states have a maximum coverage period up to 364 days. If your short term coverage expires, many states will allow you to reapply for a new temporary policy.
If your application and payment are accepted, you can be insured as quickly as the next day or choose a start date within the following 30 days. Best of all, nearly all doctors accept short-term insurance.
Protection From Financial Catastrophe
As a type of catastrophic insurance, short term health insurance policies are designed to protect you from financial ruin. When it comes to medical insurance, having something is better than nothing. Today medical bills rank as the leading cause of bankruptcy in the United States, so it’s smart to protect your financial health.
Temporary insurance can reduce the cost you pay for unexpected serious illness or traumatic injury. Many times short term insurance has a high deductible, such as $5,000 or $7,500, but that’s a fraction of actual charges for a major emergency, which could easily reach $100,000 or more. While a higher deductible will lower the monthly premium, select a deductible that you can afford to pay. Some bankruptcies involve people who had insurance but couldn’t cover the deductible.
What About Pre-Existing Conditions?
The Affordable Care Act, also commonly referred to as Obamacare, requires insurance companies to sell health coverage to everyone, regardless of pre-existing medical conditions. However, that requirement does not apply to short term health insurance. Individuals who have a medical condition can be denied coverage. Insurers can deny short term coverage based on medical history, pre-existing conditions or health status.
Most temporary policies exclude coverage for conditions that have been diagnosed or treated within a set period of time prior to the start of coverage. The length of time varies by state, ranging from the previous six months to five years. And, if you need to purchase another short term policy after the first policy expires, a new plan may not cover conditions that developed during the term of the first policy.
What is a Pre-Existing Condition?
Short term health policies may exclude medical claims for injuries, illnesses or conditions determined to be a pre-existing condition. Many pre-existing conditions are chronic conditions, including:
- Chronic obstructive pulmonary disease
- Congestive heart failure
- High cholesterol
- High blood pressure
Under federal COBRA legislation, employees who lose their job can continue to purchase health insurance through an employee group for up to 18 months. If you purchase a short term policy, you lose your right to COBRA insurance.
No Exemption From Uninsured Tax Penalty
Individuals can face a tax penalty for being uninsured, underinsured or insured by a policy that does not have the 10 qualifying essential health benefits required by law, such as temporary health insurance. The law does allow individuals to be uninsured for up to three months without penalty.In 2016, the penalty is $695 or 2.5 percent of adjusted annual income. For some people, the savings on premiums for short-term insurance may exceed the cost of the penalty.
No Premium Subsidies
Since short-term policies are not qualified plans, enrollees are ineligible for premium subsidies. Intended to help low-income and moderate-income families purchase their own health insurance, the subsidies are paid to consumers through tax credits.
Choosing the Right Short Term Plan
If you decide to get short term health insurance, review the plans available in your state. Consider your specific needs, and compare the details of competing plans before making a choice for the speed you need and the rates you can afford.