The Affordable Care Act (ACA) enforces enrollment periods that determine when a person can enroll in major medical insurance. Short-term health insurance provides fast, flexible coverage for people who need to purchase health insurance coverage outside of the Open Enrollment period or who don’t think an ACA-compliant Major Medical plan is a good fit for their budget and coverage needs.
Who benefits from short-term health insurance?
- People who lose coverage due to changing jobs
- Recent college graduates
- New hires who aren’t yet eligible for group coverage
- Upcoming Medicare recipients who are waiting for their Medicare coverage to start
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.
Are there limitations?
Yes. Short-term plans are not ACA-compliant, so you might be subject to tax penalties for your gap in ACA coverage (until 2019 when the tax penalty is scheduled to go away). This will depend on your individual circumstances. Your health insurance agent can help you determine whether or not you’d be penalized for not having ACA coverage.
If you aren’t sure whether you qualify for an exemption to the tax penalty or if short-term coverage is the best option for you, connect with a Savers agent today for assistance.
Most short-term plans won’t cover preventive care or pre-existing conditions, meaning 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.
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, whether or not you’ll be subject to tax penalties, and whether you have pre-existing conditions which could disqualify you from obtaining short-term coverage prior to purchasing a policy.