The Lowdown on Short-Term Insurance Plans
Short-term insurance plans in the United States offer coverage for a limited duration of time. Consumers may choose from options that provide coverage for a few months up to a year. They’re stopgap measures that help people who need to bridge gaps in longer-term plans with temporary medical insurance coverage. Short-term insurance plans come with a list of pros and cons. If you’re trying to determine if this type of medical insurance is the best option for your situation, here is the lowdown on short-term insurance plans with their advantages and disadvantages.
Who typically needs short-term insurance?
Short-term insurance plans are not permanent solutions for people who experience gaps in medical insurance coverage, but they do offer a safety net for unexpected medical expenses. Going for any length of time without healthcare insurance is a gamble on your financial health and your future wealth. One major accident or medical event can wipe out savings and cause debt that could lead to bankruptcy and loss of personal property. Health Care Insider explains that short-term medical insurance provides coverage for people who do not have long-care health insurance coverage. Even a few days of no coverage can result in thousands of dollars in medical expenses. We cannot predict when accidental injury or illness will strike. Medical care is expensive and insurance coverage defrays the costs. Even healthy people with no medical conditions are subject to health emergencies that require medical attention. If you’re not prepared to pay all of your medical bills out of pocket, you need to have health care coverage. If you know your current coverage will lapse, it’s best to arrange for temporary coverage through a plan that can range from 30 to 364 days, depending on your situation. The people who typically need short-term medical coverage are those who need to fill the gap between employer coverage from their old job to the date when employment coverage from the next job begins. You may need coverage during an employer waiting period for a new job. If you miss an open enrollment period, you may need temporary coverage until the next enrollment date comes around. People who retire early and do not qualify for medicare yet may need short-term medical insurance. Anyone exempt from Obamacare may need short-term insurance coverage.
Benefits of short-term insurance plans
Money Crashers reports that short-term insurance plans can be as short as thirty days or as long as 364 days. Some states have limitations and restrictions on how long these plans can last, while others allow renewals for up to three years. Short-term insurance plans have their advantages. Most short-term insurance plans cost lower premiums. Some plans cost around $100 per month or a little more. Short-term insurance plans can be five times lower priced than most long-term providers. It helps those on a budget stretch their dollars further without sacrificing healthcare coverage. Short-term health insurance is flexible. Policies vary in coverage times a. If you know how long you need to have the stopgap insurance, you can sign up for a plan that covers the dates you expect to be without coverage and have the plan expire on the day your new insurance begins. Some plans offer coverage that covers preventative care, prescription drugs, emergency care, hospitalization, surgery, lab work, and outpatient care. It’s wise to review and compare the various plans to choose the option that best meets your needs and is within your monthly budget. Some plans allow you to choose your healthcare providers without limits, but some only pay in-network providers. Short-term insurance is easy to get. Consumers may sign up for plans throughout the year. There are no waiting periods or open enrollment deadlines. It’s easy to sign up for the plans. Most require a few yes or no questions regarding the client’s health history. The effective date is usually the day after completing the applications and paying the premium. Some short-term policies allow for monthly payments, and you can pay some upfront for the entire coverage period.
Disadvantages of short-term insurance plans
Most affordable short-term insurance plans may seem like a bargain, but when you choose a health care plan you will notice that the short-term plan costs less money but most do not offer comprehensive health care coverage. Coverage is usually quite limited. Some plans are not the value they may seem to be at first. Patients pay high deductibles. Previously existing conditions may not be covered, according to CBPP. Short-term insurance plans do not cover many types of health conditions. Most only cover new health conditions arising after the plan goes into effect. Another problem with short-term health care plans is that if you develop a health condition while under the plan it will be documented in the medical system and on your records. When you renew a short-term health care plan, the medical issue will become a preexisting condition. It may qualify under the next coverage cycle.
Most short-term plans do not cover mental health problems like anxiety or depression. They often cover emergencies only and do not help you pay the costs of routine health care, preventative care, maternity care, or office visits. They often cover a limited number of hospital or doctor visits. You must read the fine print carefully to know what the plan will cover and what it will not. Some plans provide a prescription discount card but do not pay much of the cost of prescribed medications. High deductibles limit the amount of care they pay and cover. Patients with short-term plans may avoid going to the doctor for checkups and testing because they cannot afford to pay the out-of-pocket costs upfront to reach the deductibles. It can lead to increased or worse health problems and higher expenses later. There are often caps on coverage when you do meet the deductible. Another drawback is that short-term medical insurance plans are not ACA-compliant and do not qualify for subsidy assistance. Some short-term medical plans can result in penalties under the Obamacare Act if they do not meet ACA standards. Short-term healthcare insurance plans are not available everywhere. Ten states do not offer these types of plans. You cannot purchase them in Hawaii, Massachusetts, Connecticut, New Jersey, New York, Vermont, Rhode Island, Colorado, California, or Washington. Sixteen other states limit plans to one year and do not allow participants to renew them.
How to find the best short-term insurance plan?
It pays to find out all the options available for short-term insurance coverage in your state. They vary from one to another. The best solution is to compare the available plans to find the best value for your situation. For example, if you have pre-existing health conditions, you may benefit more by selecting a plan with higher premiums that cover this category of ongoing healthcare needs, along with prescriptions and any necessary supplies. Start with an outline of your current healthcare needs, determine how much you can afford to spend on monthly premiums, and how much your monthly medical expenses cost. Weigh the benefits offered by each plan to determine if they will provide a genuine value that will save you money. Every person has different needs. That’s why insurance coverage providers offer choices in plans that differ.
Comparing short-term insurance plans
You can easily find hundreds of short-term insurance plans with an internet search of available plans in your state. Here is an example of what you will find in a generic search. We compiled an overview of short-term insurance plans by company, policy types, and other helpful information for comparison to help you get started. Investopedia provided the information on the example plans below.
Company: Everest
Everest is a short-term insurance plan provider that is available in 23 states throughout the nation. The advantages of the plan are its generous choice of healthcare providers without confining insured persons to specific networks. The plans offer low co-payments and you may co-insure for maximum coverage. Everest also offers a wellness benefit, with coverage for mental health, substance abuse benefits, home health care, and physical therapy, which are options that many short-term plans do not offer. Plans cover wellness visits, doctor visits, mental disorders, and emergency care. On the downside, unless a patient is hospitalized, prescriptions are not covered, it’s only available in 23 states and the plan does not cover pre-existing conditions. You may choose deductibles that range from $1,000 to $10,000 in increments of $2,500 beyond the $1,000 deductible offer. You can choose the maximum coverage benefits up to $1.5 million. Copays range from $30 to $50, and coinsurance options can provide you with 50/50, 70/30, 80/20, or 100/0 plans Preventative medicine is covered under the wellness benefit. Emergency coverage starts the day after the plan is approved. Routine wellness benefits are effective after a five-day waiting period. Cancer benefits start after 30 days for new diagnoses after the 30 days.
Company: Pivot Health
Pivot Health is a short-term healthcare insurance plan provider that offers medical plans in 24 states with some limitations on coverage in some states. The coverage limits range from $100,000 to $1 million. Pivot offers a range of plan choices for affordable basic coverage through value options to customize the price and policy to meet the needs of each applicant. The plan options may add discounts for services such as vision care or prescription drugs. Participants may choose any doctor with no network restrictions. The plan provides 24/7 access to telemedicine services. It also provides discounts for mental health, physical therapy, substance abuse, and home health care services. Pivot Health is a new company that started its business in 2016. Participants have many options to choose from. Deductible options range between $1,000 to $10,000. Coinsurance of 20 or 30% is available with the maximum coinsurance out-of-pocket cost ranging from $3,000 to $10,000. Available features include 70 % off prescription drugs, and discounts from 15 to 30% on vision, eye exams, frames, lenses, and contacts. On the downside, the cheapest premium plans have low maximum coverage. The plans require emergency pre-certification within 48 hours and they do not cover pre-existing conditions.
Company: EIHC Health Group
EIHC Health Group provides short-term insurance plans with various policy types, coverage limits up to $2 million, and it is available in 35 states. The insurer offers customizable insurance plans with low to high deductible options based on monthly premium rates. The company allows participants to add medical coverage for pre-existing conditions. Some plans offer routine check-up coverage and diagnostic exams, and you may use your doctor within or out of the network. The lifetime maximum coverage amount is up to $2 million, depending on the plan. On the downside, EIHC Health Group plans may require you to join Communicating for America. Many types of coverage are excluded from the plans. Some plans require high deductibles before coverage may be accessed, and the plans do not cover sports-related injuries.
Final thoughts
Short-term insurance plans come with their advantages and drawbacks. They can provide some help to get you through brief periods when your long-term insurance plans are interrupted. You must understand the potential benefits of short-term insurance plans. Read the fine print for various types of policies. They’re not all the same, nor are the premiums. You will find that most short-term plans are cheaper than long-term options, but not all people will find genuine value in the coverages. Some of these insurance plans provide little relief from extensive medical expenses with high deductibles and caps on maximum benefits paid. Short-term insurance is not a long-term solution, and they’re not all available in every state. Consider your unique situation to determine if a short-term insurance plan is in your best interest. The key takeaway from our overview is to encourage you to investigate all available options. Compare the costs versus the value you stand to gain from the coverage and choose the plan that has the most potential to protect your physical, mental, and financial health.
