Short-Term Health Insurance Can Bridge the Gap

Posted by on in Life Transitions

Thanks to the Affordable Care Act (ACA), otherwise known as ObamaCare, interest in short-term health insurance has spiked significantly.

According to health insurance exchange eHealth, there was a 134 percent jump in applications for short-term health insurance between 2013 and 2014, when many ACA rules took effect.

Obtaining short-term, or temporary, health insurance doesn't mean you can avoid ACA fees for not holding long-term coverage. Short-term health insurance does not fulfill all ACA requirements, which is why a government fine will be issued to people who only have short-term coverage throughout the year.

However, short-term health insurance can be an inexpensive, smart alternative for people who are between coverage plans (due to a job loss, for instance), have missed an open enrollment period, or want to fill gaps in their long-term policy start dates. Short-term coverage can last up to 11 months. Going without health insurance for even a short period can jeopardize your finances. Furthermore, a lack of health insurance might deter you from seeking any medical care at all.

Short Term Plans

If you need health insurance outside open enrollment and haven't experienced a qualifying life event, such as getting married or having a baby, short-term health insurance is often your best option. A short-term medical policy from HCC Life, for example, has simplified underwriting, no application fees, no out-of-network penalties and low copays at urgent care centers. Plus, you'll find out right away if you're approved.

One of the key advantages of short-term insurance is the cost. According to eHealth, the average monthly premium for individual major medical plans chosen during the 2015 open enrollment period was $286. By comparison, the average premium for individual short-term plans selected in 2014 was $110.

Of course, the lower cost comes with a trade-off. Short-term health insurance doesn't provide the array of benefits you'd get through a major medical plan. Many short-term policies will not cover routine office visits, maternity care, chronic illnesses or pre-existing conditions, and prescription drug coverage might not be an option. Rather, short-term health insurance is designed to safeguard someone in case of a medical crisis, such as an accident or unexpected illness.

Short-term plans cover services such as doctor's visits, surgeries, inpatient care and outpatient care. A survey by eHealth indicates that 89 percent of policyholders who had used their short-term coverage said they still were able to see the doctors they wanted to see.

Obtaining Coverage

If you're healthy, qualifying for short-term coverage can be a fast, simple process. However, if you're coping with pre-existing health issues or you need ongoing medical care covered by ACA-compliant plans, short-term medical plans are not the best option. Unlike plans regulated by ACA, short-term plans aren't required to cover pre-existing conditions.

Short-term plans also cap the amount of benefits you receive and usually do not provide the ability to renew the coverage. However, when short-term coverage from one insurer ends, a consumer can seek coverage from another insurer.

Aside from the relative ease of obtaining short-term health insurance, another benefit is that the coverage can kick in within 24 hours of signing up. Furthermore, most insurers offering short-term policies will typically allow you to pay for the insurance all at once or on a monthly basis.

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