Short term health plans are becoming a focus since open enrollment ended. Unless you have a qualifying event, short term health insurance might be the only option you can take until November.
If you missed the April 1, 2014 Affordable Healthcare Act (also known as Obamacare) deadline, don’t panic. You can still sign up for short term health insurance. This type of health insurance is often referred to as “band aid” insurance because it provides health coverage that bridges the gap until the next opportunity to sign up for Obamacare. Most industry experts consider short term health plans to be significantly better than proceeding with no health insurance at all. Yet these experts also provide some warnings about this last resort band aid insurance.
One common complaint about short term health insurance policies is that they typically do not provide coverage for individuals with pre-existing conditions. Aside from discriminating against the already afflicted, these policies also bar many past subscribers from continuing coverage after they experience illness, disease or injury. Making matters worse is the fact that individuals who sign up for this band aid insurance will face the standard fee (1% of household income or $95) that applies to Americans who refused to sign up for Obamacare (save for those who qualify for Medicare or Medicaid).
Even with all of these short comings, large numbers of Americans are still signing up for short term health insurance. Why? The answer is simple. Any coverage is better than no coverage. The uninsured face the daunting prospect of declaring bankruptcy or blowing through their nest egg savings in the event of a serious illness or injury. So many are biting the bullet and shelling out the money for a short term health insurance plan. They’d rather be “safe than sorry”, so to speak.
Yet short term health insurance isn’t a recent phenomenon. Individuals in limbo while seeking employment or while moving from one job to another have leaned on these band aid policies for decades. Young people who no longer qualified for coverage under a parent’s policy and early retirees who have not yet reached Medicare’s threshold (age 65) for coverage also flock to these back up policies. Part of the popularity of short term health insurance is that it is much cheaper than traditional health insurance due to its limited scope of coverage.
For many, short term health plans are the perfect steppingstone to reach the next Obamacare sign up opportunity which begins on November 15. Those who sign up at that point will receive Obamacare benefits starting on January 1, 2015. So, why risk going broke or even a potential bankruptcy caused by gigantic medical bills over the next 8 months? Signing up for a short term health insurance plan is a prudent financial decision that bides the time until the beginning of the new year. The only other way to enroll in Obamacare before the new year is to have a major life event take place like being downsized at work, becoming a parent or getting married.
Those who choose a short term health plan should be aware that they are also getting the short of the stick, pun intended. While they will be saving money and bridging the gap until the next Obamacare sign up period, they’ll also be missing out on some crucial health benefits. As mentioned above, individuals with pre-existing conditions can be denied short term health coverage. The children of those enrolled in short term health plans are not eligible for coverage under the short term plans, while the children of those enrolled in Obamacare are offered coverage until the age of 26. Also, short term health coverage has a lifetime benefit limit and fails to offer a wide range of health services like annual health physicals. In comparison, Obamacare mandates that patients receive benefits like mental health treatment, prescription drugs and much more.
Anyone interested in a short term health plan should know that they can sign up for a plan that lasts as few as 30 days and as long as 6 months or possibly longer.