ACA Options and Temporary Insurance

Short Term Medical Insurance


Short term health insurance for temporary gaps in coverage.



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Across the nation, many Americans are trying to figure out how to proceed in today's health insurance climate. It's easy to get confused about your current insurance coverage options with all the changes to American healthcare under the Affordable Care Act (ACA).

The goal of the ACA is to ensure that all U.S. citizens and legal residents have access to affordable health insurance. Signed into federal law in 2010, the ACA created the Health Insurance Marketplace, a new way for families and individuals to get insurance coverage.

Under the ACA, most Americans must have health coverage or pay a penalty. If you don't have coverage in 2016, you'll pay a fine of 2.5% of your income, or $695 per adult ($347.50 per child); whichever is higher, on your taxes for 2016.

Your Health Insurance Coverage Options

If you have access to a plan through your employer, that should be your first point of investigation. In 2016, businesses with 50 or more employees must offer health insurance coverage that meets a set of minimum standards. These standards are largely similar to what you would find with health plans in the Health Insurance Marketplace. Moreover, if your employer offers health coverage, it is unlikely you will qualify for a tax credit in the Marketplace.

If you do NOT have access to insurance through your employer, here are your 4 options:

  • Enroll in a Marketplace Plan

    The current open enrollment period began on November 1, 2015, and lasts until January 31, 2016. The deadline for buying a Marketplace plan with coverage to start on January 1st was extended from December 15, to December 17, 2015.

    If you enroll between December 18, 2015, and January 15, 2016, your coverage will begin February 1st. Enroll from January 16, 2016, to January 31, 2016, and your coverage will begin March 1, 2016.

    If you do not sign up during this 3-month period, you will not be able to purchase a Marketplace insurance plan for 2016 unless you qualify for a special enrollment period. The Marketplace is the only place where you can purchase a plan and receive the premium-reduction tax credit.

    • Pros: Comprehensive benefits; income-based tax credit; guaranteed coverage; easy comparison between plans; no pre-existing condition exclusions

    • Cons: May be expensive; Limited provider networks; only available under special enrollment circumstances or during open enrollment periods

    • Ideal for:People who do not have health insurance offered through their employer; people who qualify for a special enrollment period; people in low-income brackets; families with many dependents

    Enroll in a Marketplace plan at

  • Enroll in an ACA Plan Outside the Marketplace

    You can purchase an ACA-compliant plan from an individual insurance carrier outside the Marketplace. This provides you with a wider selection of plans than what is available within the Marketplace. However, you won't be able to take advantage of the premium-reduction tax credit available on plans purchased through the Marketplace. As with Marketplace coverage, these plans are not available outside the 3-month open enrollment period.

    • Pros: Comprehensive benefits; guaranteed coverage; no pre-existing condition exclusions

    • Cons: No tax credit; not available outside open enrollment; difficult comparison shopping

    • Ideal for: People who do not have health insurance offered through their employer; people who do not qualify for a premium-reduction tax credit

    See if you might qualify for a premium-reduction tax credit here.

  • Stick with Your Current, Grandfathered Plan

    Under the ACA, a grandfathered health plan is a group plan created on or before March 23, 2010, or an individual health plan purchased along the same timeframe. If this applies to you, and you're comfortable with your current policy, you may want to keep it. However, be aware many carriers are dropping these plans, forcing customers to purchase a new, ACA-compliant plan. 

    • Pros: Balanced on price and benefits; no need to make immediate changes

    • Cons: May eventually be canceled by insurance company; less coverage than ACA-compliant plans; no new policies may be sold

    • Ideal for: People who are comfortable with their current grandfathered plans

    See your options if your grandfathered plan is cancelled here.

  • Purchase Short Term Medical (STM) Insurance

    An affordable STM policy provides a temporary solution to fill gaps in your health coverage. If you purchase an ACA health plan, your coverage will not start for a period of 15-45 days, depending on when you buy your policy.

    STM offers reduced benefits at a lower price.

    • Pros: Inexpensive compared to major medical plans; guaranteed coverage; fast and easy enrollment process; full refund if cancelled within 10 days and no claims are filed
    • Cons: limited benefits; only offered by a few insurance companies; subject to increasing tax penalty if you do not eventually purchase an ACA compliant plan
    • Ideal for: People who are looking to bridge an insurance gap

Because a short term medical policy does not meet ACA requirements, it is best suited for the waiting period between the day you purchase your ACA plan and the day the plan becomes effective. Buying the policies together in this way ensures you have health coverage every day while also avoiding any tax penalties.

Get a quote here to see how little an STM policy costs.

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Affordable Care Act (ACA) Requirements

STM plans from HCC Life Insurance Company don't meet all of the requirements for ACA plans. By enrolling in an STM policy exclusively, you will likely have to pay a $695 penalty on your 2016 taxes, or 2.5% of your adjusted gross income, whichever is higher unless you qualify for an exemption. Depending on your health status, however, STM plans may be less expensive. STM plans are also a good option while you wait for your recently-purchased ACA plan to become effective.

Watch the following three-minute video for more details.

Want In-Depth Information About Your Health Insurance Coverage Options?

Download our new guide "STM and the ACA: Choosing the Health Insurance Right for You" to get your coverage questions answered.

Miss the Open Enrollment Deadline?

If you missed the Open Enrollment cutoff, you still have several insurance coverage options.

Read more about your coverage options here.

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ACA questions Frequently Asked Questions

How do I start an application?

If you are interested in purchasing a plan through your state’s health insurance exchange, you must create an account on Afterward, you will select your state, and the next steps will be provided. Alternatively, you can apply over the phone by calling the Marketplace Call Center, by downloading, completing, and returning a paper application, or in-person by requesting the help of a navigator, agent, or broker in your area.

Will I save money on health insurance?

Filling out an application is the best way to find out if you will save money through a Marketplace plan. But you can estimate your costs by typing in your zip code, dependents, and annual income at

Why is STM not compliant with the ACA?

HCC Life’s Short Term Medical insurance does not meet all the benefits required by the ACA. Short-term medical plans are limited duration policies—it does not cover preexisting medical conditions and does not cover most preventative care. Short-term medical plans are designed to cover unforeseen illness and injuries.

Read more Frequently Asked Questions about the ACA and Short Term Medical Insurance here.

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