What Is A Short-Term Health Plan?
Short-term health plans tend to be lower-cost and with more limited coverage. These plans are available for most people ages 0 to 64 and provide anywhere from 2 months up to one year of coverage with the option to extend the plans. In some states, you could have a “short-term” plan for up to three years. That’s unlike regular health insurance, which has an annual renewal period.
A good way to think of short-term plans is that they’re temporary health insurance with lower premiums, higher out-of-pocket costs and less coverage than a traditional group or ACA qualified health plan.
Not all states allow short-term plans and others place limits on the amount of time you can be insured with one.
What Does A Short-Term Health Plan Cover?
What short-term plans cover varies by company and plan option. Federal regulations allow short-term plans to create their own coverage plans without any required mandates found in a regular health insurance plan.
Services that may not bet covered by short-term health plans include:
- Mental health
- Substance abuse
- Outpatient prescription drugs
- Maternity care
As with other types of insurance, short-term plans with more benefits will have higher premiums than ones that provide more limited protection.
It’s also important to point out that short-term plans are usually not guaranteed issue. While ACA qualified plans require that insurers approve everyone regardless of health status, short-term plans can reject and application based on health conditions. A short-term plan may reject you if you have a pre-existing condition or may charge you higher premiums based on your health premiums. That’s not allowed in ACA plans.
Who Can Benefit From Short-Term Coverage?
If you had healthcare coverage through your employer but have changed or are in the process of changing jobs, a short-term plan will give you quick access to flexible insurance benefits during your gap in major medical coverage. Short-term insurance policies can give you peace of mind until you’re eligible to enroll in a new group plan through your new employer.
Recent graduates can breathe a little easier knowing that they have health insurance while they’re on the job hunt. This coverage is also useful since most businesses require that new employees complete a new hire probationary period. That period prevents new employees from receiving employee health benefits until they’ve worked for an amount of time specified by their employer, which can be 30, 60 or 90 days.
Future Medicare Recipients
Let’s say you’ll turn 65 in two months and don’t want to enroll in a long term Major Medical plan in while you’re waiting for your Medicare benefits to kick in. Would you rather go without coverage until your Medicare is active, or purchase coverage that is more flexible and budget-friendly than an ACA plan in the meantime?
Short-term coverage gives you the freedom to purchase health insurance during your gap in coverage without the expense and hassle of enrolling in a Major Medical plan that you’ll just need to cancel once you can access your Medicare policy.
Is A Short-Term Plan Right For You?
Short-term plans are a great fit for some people in certain specific circumstances but they should never be considered a replacement for your ACA qualified plan. Most short-term plans won’t cover preventive care or pre-existing conditions so you you may want to temporarily pay a higher premium to extend your ACA insurance plan until you’re eligible for new group coverage or Medicare to ensure you’re covered for any pre-existing conditions.
However, short-term coverage can give you the peace of mind that comes with medical insurance coverage until you’re able to work out a long term solution. You’ll need to address whether or not the benefits of short-term coverage outweigh potential drawbacks and whether you have pre-existing conditions which could disqualify you from obtaining short-term coverage prior to purchasing a policy.