Short term health insurance is a type of coverage that individuals can purchase for a specific period of time, from one month to one year. They are designed to give people temporary health coverage during times when there may be a gap, such as losing a job, traveling out of the country, or graduating from college.
This temporary health insurance works somewhat similar to a traditional permanent plan. Many of the same companies that offer traditional coverage also offer this type. It is often recommended when an open enrollment period has passed but a new one will occur before the temporary coverage will expire.
Pro: Usefulness. It is generally not a good idea to go without some form of coverage, even for a small time period. There is no way to predict when or where an accident or illness will occur, even for the safest conditions. The out of pocket expenses for people without any coverage at all can cause a serious financial strain, particularly for people who already have financial struggles.
Con: Limitations. Short term insurance may have limitations on services. Unlike the plans in the Affordable Care Act coverage, companies are not required to provide any services. This means it is likely that services such as mental illness and substance abuse treatments may not be covered. Some services included in preventative care may also not be covered.
Pro: Cost. Most plans are fairly inexpensive. Since it is designed to be temporary, it is often less costly than traditional coverage. Many health insurance companies are aware of the limited income a new graduate or recently unemployed person may have.
Con: Cost caps. There may not be a cap on the out of pocket costs of a temporary health insurance plan. Traditional plans often have a limit on how much you have to pay on your own, but many of these plans do not have these same limits. A temporary plan may also have limits on how mcyh it will pay for services, leaving you to pay the difference without reimbursement.
Pro: Ease of securing. It is often fairly easy to obtain coverage under one of these plans. Generally, new enrollees do not have endless amounts of paperwork to fill out and submit. Also, many companies do not require a physical examination for the temporary insurance. Obtaining coverage is fairly quick. In most cases, coverage can be active in as little as 24 hours following sign up and premium payment.
Con: Other insurances. Purchasing short term health insurance can pose a problem with qualifying for other types of insurance. For example, if you get a short term plan on your own and expect to get COBRA insurance coverage, you will not qualify. It is important to keep this in mind. Also, if you are currently covered under COBRA and you purchase other short term insurance, the COBRA coverage will end.
Pro: Choice of doctors. There are a wide range of doctors that accept this form of insurance. You may find, however, that you cannot just choose any doctor and may be limited to a specific list of doctors, similar to permanent insurances. This depends on the company you choose and the specific network of providers it has.
Con: Tax penalties. Coverage with a short term insurance plan cannot be considered creditable under the Affordable Care Act. This means that an enrollee will still be charged a tax penalty for being uninsured. As of 2014, the penalty amount is 1% of the household’s modified gross income or $95. The largest of these two amounts will be the penalty, even if creditable coverage is secured before the current tax year is over.
When you are comparing plans for short term insurance, it is important to compare all of the options. By learning the major advantages and disadvantages, you can pick a company and plan that will be best suited for your short term medical needs. Be aware, however, that many of these plans have limited or non-existent coverage for pre-existing conditions.