If you’re looking into health insurance options while you’re between jobs, just out of school or in another temporary situation, then short-term health plans or STHPs may be the way to go. Understanding the terms of health insurance policies can be tough when you don’t know where to begin. To help you with your research, we’ve put together some frequently asked questions about short-term health insurance.
What is short-term coverage?
Short-term health plans cost less than major medical plans and cover some of the same services that major medical plans do, but your actual coverage will vary based on the company you buy the plan from. For example, some larger companies like UnitedHealth Group offer STHPs that include an option for prescription coverage. You can also find tiered levels of coverage to customize your policy for your needs. Temporary coverage usually pays for emergency services, doctor’s visits and surgery but may not pay for extras like preventive visits, maternity care or rehabilitative services.
When you enroll in a temporary policy, you’ll choose how long you want the coverage to last. Most companies offer plans that run between 30 days and six months, but you can also find policies that last a full year. Coverage starts as soon as the next day if you pay your premium when you sign up. Unlike major medical insurance, STHPs don’t include automatic renewal, which means you’ll have to go through the application process all over again if you want to continue a plan once it ends.
Who qualifies for temporary insurance?
Insurance providers don’t set many restrictions regarding age when it comes to STHPs, but they do place limits on illness and pre-existing conditions. If you’re younger than 65 without any existing medical issues, then you will most likely qualify for a short-term plan. New laws regulate discrimination in the insurance industry, but the new laws don’t apply to temporary insurance plans. That means that you can be denied coverage if you have a condition like diabetes, Crohn’s disease or even pregnancy. People over the age of 65 usually can’t get short-term plans because they qualify for Medicare.
How can I apply for short-term insurance?
Major medical plans often require lengthy sign-up periods and can take a while to kick in. Short-term plans go into effect almost immediately and require simple enrollment. In fact, you can sign up for an STHP in less than 20 minutes online depending on which insurance company or website you use. Temporary coverage is designed to help people out in a jam. If you’ve lost coverage through work or recently started a new job and need to wait for your employer-sponsored insurance to start, then short-term insurance offers a quick and convenient way to stay protected in the interim.
Are there any drawbacks to buying an STHP?
Aside from the fact that short-term health plans don’t meet the minimum essential coverage requirement of the Affordable Care Act, there are some drawbacks that you should know about these policies before you decide to enroll. For starters, insurance companies can drop your coverage at any time. This is a practice that happened nationwide before the ACA took effect, but major medical insurers can’t get away with it anymore. If you buy a short-term plan and the insurance company determines that there’s a problem with your application or paperwork, then you might lose your coverage.
As we mentioned above, you may not be able to renew your policy once it ends. Insurance companies are under no obligation to continue your coverage with an STHP. If you like your policy, you’ll have to submit a new application as if you’re a completely new enrollee. You won’t be guaranteed the same rates, and you may end up paying more for the same exact coverage.
One of the upsides to short-term policies is that they’re much cheaper than major medical plans in terms of monthly premiums. However, you’ll probably pay more in out-of-pocket costs with a temporary medical plan because they’re not designed to cover everything. Insurance companies set high deductibles and low payout caps with STHPs, which means you might end up paying thousands of dollars of your own money for a straightforward surgery.
Does an STHP meet the new ACA requirements?
Short-term insurance does not meet the requirements of the new healthcare law. The Affordable Care Act requires most people to enroll in major medical insurance, and STHPs don’t count. That’s why insurance carriers can deny coverage to people with pre-existing conditions and set restrictions on their policies. If you don’t enroll in a qualified health plan during the open enrollment period each year, then you will be taxed by the IRS when you submit your annual filing. Keep in mind, however, that having a plan in place for emergencies still beats not having any coverage at all. STHPs may not qualify as minimum essential coverage, but they can protect you and your family in a pinch.