Health insurance. It’s one of those necessities. It’s also one of those things that you don’t think about too often—that is, until you don’t have it. Whether you decided to retire early, experienced a layoff or furlough, or opted to venture out on your own to start a new business, you likely found this article because you wanted to learn more about short-term health insurance. We’re here to help.
What is Short-Term Health Insurance?
Short term health insurance is a type of health plan that can provide you with temporary medical coverage when you are between health plans, outside enrollment periods, and need coverage. These plans exist to bridge the gap between loss of insurance and the start date of new insurance. For example, a retiree less than a year away from Medicare, a person changing jobs, or a new business owner may all see value in one of these plans.
Basic Costs in a Short-Term Health Insurance Plan
As with any other insurance, you will be responsible for the following:
- Premium: The monthly fees you pay for coverage.
- Deductible: The threshold of out of pocket costs before your plan begins sharing costs. For example, a $5,000 deductible means that you pay out of pocket for the first $5,000 of coverage.
- Coinsurance: A cost you may not be used to, coinsurance represents a percentage of costs you pay after you meet your deductible.
- Copay: Generally payable at time of visit, copays differ based on the service you need.
- Out of Pocket Costs/Uncovered Costs: Short term plans have more flexibility in the services covered. You may pay out of pocket services that aren’t covered.
However, as an alternative to a traditional health plan, there are a few things you should know about coverage under these. Short term medical insurance typically provides some level of coverage for: preventive care, doctor visits, urgent care, and emergency care. There may also be coverage for prescriptions.
Some plans do not cover services included in traditional health plans. For example, coverage required under a traditional plan (e.g. maternity, substance abuse, mental health) may not be covered by a short-term plan. Be sure to read what is covered. Make sure to read the “exclusions and limitations” information before buying any plan. This will tell you what’s covered and not covered by a certain plan.
While you may have fewer covered services, you also have more flexibility in coverage. As these plans aren’t beholden to federally-required or state-based essential health benefits, you often see plans better tailored to your needs.
For example, a person aged 50-64 probably doesn’t need maternity coverage, and a straight-laced teetotaler doesn’t need substance abuse coverage—both considered essential at the Federal level.
Short-term insurance, by its very nature, is meant to be short-term. These plans often last less than a year, allow you to cancel at any time without a penalty, and are meant to bridge gaps between coverage—for example, if you are not subject to a qualifying life event, this would hold you over until Open Enrollment and January 1.
However, unlike Open Enrollment, in which you buy a month or so in advance, once you are approved for coverage, your coverage starts within days.
Pre-Existing Conditions Aren’t Covered (or Cost More)
One thing a potential buyer should know is that with a short-term health insurance plan, you will likely be required to fill out a medical questionnaire when applying. As these plans aren’t subject to the stipulations set forth by the Affordable Care Act, applicants with pre-existing conditions may be turned away. That said, without pre-existing conditions, the population is healthier, meaning this type of insurance has another feature.
Lower Premiums—Higher Out-of-Pocket and Deductible
One of the first things you may notice about a short-term health insurance offering is the lower premiums. Due in part to the coverage, in part to the ability of the insurer to deny coverage, and in part to the shorter term of coverage, those considering this option will likely see lower premiums.
However, this comes with a catch. As these plans are meant to bridge the gap and provide necessary coverage, you’ll likely see higher out of pocket costs and deductibles. Pair this with coinsurance, higher deductibles, and coverage limitations, and you may run into unexpected costs.
One of Many Options Available to You: Get to Know Insurance Broker Hub
Short-term insurance is one of the many options available to you. If you are healthy, only plan to use insurance in the event of an emergency, and don’t qualify for a special enrollment period, this could be the product you need.
That said, you may want to pair this with insurance services including accident insurance, critical illness insurance, or other coverage options to bridge this gap in coverage. What’s right for you? Why not join the more than 10,000 satisfied consumers who have found coverage using Insurance Broker Hub?
Our free service gives you access to an independent network of national brokers who have the experience and expertise to design a plan around your needs and budget. Ready to get started? Simply request a no obligation health insurance quote here.