Short-term health insurance policies have been an important part of the health insurance market in America for more than three decades. This often essential service provides people with coverage who lose existing coverage for a variety of reasons. The most common is the loss of a job or transitioning from an old job to a new job.
There are other scenarios, as well, such as the time period after retirement before eligibility starts up for Medicare. Graduating from college and dropping the university of college medical plan is a common reason for dropping coverage, too. Yet another common reason for lack of coverage is missing the ACA (Obamacare) open enrollment deadline.
No matter your situation, short term health insurance may be an option when you’re waiting for the next enrollment or switching careers. Here’s what you need to know about short term health insurance.
How Is ‘Short-Term Health Insurance’ Defined?
The length of coverage allowed under short term health plans varies considerably from state to state. Some states outright ban the sale of short-term policies. They aren’t allowed in New York, California, New Jersey, or Massachusetts.
Other states allow the sale of short-term plans but they are sold by very few providers, and thus are extremely difficult to find. These states include Colorado, Delaware, Hawaii, Rhode Island, Vermont, and the District of Columbia.
Until recently, there was a national 364-day limit of the length of short-term health care policies. But recent federal legislation allows for up to 36 months, depending on the state of residence. In many states, a short-term plan can be purchased for as little as one month but can be extended to 36 months.
Check Your Own State Regulations
Each state differs dramatically in regulating short-term health plans. A few examples include Minnesota which allows a maximum of 185 days, Hawaii only 90 days, and South Carolina allows up to 11 months. As you can see, there is considerable variation depending on where you live.
Can The Policy Be Renewed?
Some states allow customers to renew or extend their short-term policy while others do not. States that do may allow up to 36 additional months of coverage. One way around renewal restriction is to buy a second short-term policy from a different provider. But, here again, some states have created legislation to close this loophole.
What Do They Cover?
Short-term insurance plans are generally intended to cover unexpected illnesses or injuries. They may also cover hospitalization, ambulance services, lab and X-ray tests, rehabilitation, emergency medical services, prescription drugs, and most surgeries.
What short-term plans do not cover are mental health conditions, a pre-existing condition, substance abuse, and preventative care.
What Are the Benefits of Short Term Health Insurance?
In some respects, short term health insurance options offer significant benefits and advantages over long-term policies. The most prominent advantages are:
You Can Obtain Coverage Quickly
Short-term plans can be applied for online and approved in just hours or days. Once a customer is approved, coverage generally begins immediately.
People can also apply at any time of the year. That’s not the case for Obamacare which generally can only be applied for from November 1 through December 15 of a given year. This can vary slightly from state to state.
You Can Keep Your Doctor
Short-term health insurance policies enjoy a very extensive network of healthcare providers. That means you will almost certainly keep your current doctor and go to the same clinic or hospital you favor now.
They Usually Cost Less
The price tag for short term policies tends to be far less expensive than a typical plan obtained through the Obamacare system. For comparison, an Obamacare-compliant policy averages $448 per month while short-term plans may be routinely purchased for about $113 a month.
You can Cover Your Entire Family
Short-term plans can accommodate coverage for every member of a family. However, note that each member must meet the requirement of the plan.
For example, if one family member has a pre-existing condition, that person would not be eligible for coverage. You might also be able to customize your short-term policy to fit your specific needs, too, if necessary.
You May be able to Cancel Without a Penalty
Short-term plans are paid on a month-to-month basis without long-term contracts. That means you can cancel as soon as you no longer need it without paying a penalty.
Common Myths About Short-Term Insurance
A number of common myths surround the short-term health insurance industry. For example, many believe short-term plans are “junk insurance” plans that don’t cover a person or family adequately.
However, the limitation of what’s covered and what is not is clearly spelled out upfront. As noted earlier, short-term plans don’t cover things like pre-existing conditions, substance abuse, preventative care, and some other needs. The buyer understands that fully before opting in.
Another common myth is that short-term coverage is sold only to the “young and healthy.” This is not true.
Short term plans are routinely sold to people from ages 18 to 64. According to Statista, the average age of a short-term plan enrollee is 36.3 years.
See if Short Term Health Insurance is Right for You
When it comes down to it, short term health insurance is a great option for those who need health coverage but cannot apply for Obamacare or for those who switch providers due to a career change.
Before deciding if short term health insurance is right for you, talk to your local healthcare marketplace representative to learn if you situation would be a good fit.