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Are All Short-Term Health Insurance Plans the Same?

Temporary health insurance plans are all different; the best one aligns with your immediate healthcare needs.

October 5, 2017 - By Erica Block - read

Commonly referred to as short-term health insurance or temporary health insurance, short-term medical (STM) plans are 30- to 90-day health insurance policies. Short-term medical plans offer consumers an affordable way to pay for healthcare for a brief period of time, such as when they experience a gap in coverage, or anticipate being uninsured for a short duration.

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Not All Short-Term Health Insurance Plans Are Alike

The exact coverage and benefits provided by short-term health insurance vary from plan to plan and depend upon the particular policy and insurance company issuing the plan.

1. Short-Term Health Insurance: Coverage & Cost-Sharing Arrangements

Short-term medical plans can vary with regard to the services they cover, although most STM plans cover (or partially cover) care related to unexpected illness and injury, such as: outpatient visits to the doctor, emergency room visits, hospital stays, surgeries, x-ray imaging and so on. Coverage for hospitalization may vary by plan and can be capped at a specific dollar amount.

Monthly premiums for short-term health insurance policies will vary, but they’ll still be lower than those of traditional health insurance plans. Generally, plans which provide more comprehensive coverage tend to be more expensive, and vice versa. Most short-term plans have a deductible and charge coinsurance, though the exact cost-sharing arrangements vary by plan.

2. Maximum Spending Limits

Insurers that issue short-term health insurance plans typically place a dollar limit on the amount they’ll pay for covered medical services, but that maximum amount, too, depends on the particular plan and issuing provider. Short-term medical plan spending limits can range from $100,000 to as much as $1 million.

3. Provider Networks

While some short-term health insurance plans limit policyholders to specific provider networks, most do not. People who have a preferred doctor are advised to find out if their doctor belongs to a particular provider network before applying for STM coverage.

Key Features of All Short-Term Health Insurance Plans

 1. They Don’t Comply with Obamacare Regulations

The coverage you get with short-term health insurance is different from the benefits conferred by major medical plans that comply with the Affordable Care Act (ACA). Short-term plans do not meet the minimum standards for insurance coverage laid out by the ACA; as such, STM coverage is much less substantial than coverage provided by major medical policies which are ACA-compliant.

  • STM Plans Do Not Cover Essential Health Benefits: Under the ACA, major healthcare policies are required to cover ten categories of essential health benefits, a category of healthcare which includes maternity care, prescription drug coverage, immunizations, mental health services, and addiction treatment. And while some short-term plans do include coverage for prescription drugs, they almost always charge more for policyholders to enjoy those additional benefits.
  • STM Plans Are Not Guaranteed Issue: Whereas ACA-compliant healthcare plans cannot deny coverage to people with pre-existing conditions, short-term plans require applicants to answer a series of medical questions before they can be insured. In other words, short-term health insurance plans reserve the right to refuse coverage to people who have pre-existing conditions. As a result, these plans are rarely issued to people with diabetes or chronic health conditions. If you fail to inform your insurer of a pre-existing condition, your insurer may terminate your coverage.
  • STM Policyholders Are Subject to ACA Tax Penalty: Because short-term policies do not adhere to ACA coverage standards, STM enrollees can still be fined for being uninsured. If you enroll in a short-term plan and lack additional ACA-compliant insurance coverage, you will still need to pay the Obamacare tax penalty upon filing your income tax return for the year.

2. Short-Term Health Insurance Is Unsubsidized

Because short-term health insurance is not regulated by the Affordable Care Act, STM enrollees are ineligible for premium subsidies, regardless of their income level.

3. Plans Are for a Limited Duration

Like their name implies, short-term plans are meant to be temporary–they provide coverage for a limited and discrete period of time. Under federal regulations, short-term health insurance plans are limited to a duration of 90 days. Those who want to extend their short-term coverage beyond 90 days will typically be required to re-apply for coverage at the end of their current insurance policy period. Insurance providers can also deny coverage to any applicant, including applicants who have been approved for short-term coverage in the past.

4. You Can Enroll Whenever

While major medical plans require consumers to enroll during a dedicated Open Enrollment Period, it is possible to enroll in a short-term health insurance policy during any time of year. Because many short-term providers offer online enrollment, short-term coverage can take effect right away. In some cases, coverage may begin as soon as your application is processed and accepted.

Tips for Selecting a Short-Term Health Insurance Plan

Tip 1: Look for Coverage That Meets Your Needs

It’s important to find temporary health insurance  that meets your individual healthcare needs. If choosing your own doctor is important to you, look for a policy without a provider network. If you’re looking to reign in your monthly expenses, look for a policy carrying a lower premium. If you don’t like the idea of paying for healthcare out-of-pocket, look for short-term coverage with a nominal deductible. Understand what your healthcare needs are and look for a plan that comes closest to meeting all of them.

Tip 2: Pay Attention to Financial, Business Ratings

An insurance policy is only as good as the company backing it. Before purchasing a short-term health insurance plan, research insurance providers and do your due diligence. Check providers’ customer satisfaction ratings to gauge whether the insurer is responsive and helpful when policyholders are frustrated. You can look up an insurance provider’s Better Business Bureau rating (if it has one) to check its financial strength rating, which should give you an idea of the company’s financial wherewithal. Look for an insurance company with a financial rating of “B” or better to ensure you are placing your trust in good hands.

Tip 3: Check Plan Details and Fine Print

When comparing the costs of different short-term health insurance policies, ask for a detailed breakdown of your monthly premium, term deductible, coinsurance rate, and your out-of-pocket maximum. These figures will provide you with a better idea of what you’re paying for. Read your plan details carefully to determine what services the plan covers and what it excludes. Anticipate your family’s medical needs, so that you don’t end up paying for a plan with more coverage than you need.

Taking the Next Steps

You can evaluate your health coverage and see if it’s the best option for your needs.

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