Short-term health insurance plans will not meet your coverage requirements under the Affordable Care Act, but there are times when a short-term health plan may be just the right fit for your temporary coverage needs.
How much do you know about short-term health insurance? Unlike standard “major medical” health insurance plans, short-term health insurance plans will not meet your coverage requirements under the Affordable Care Act (the “ACA” or “Obamacare” law), but there are times when a short-term health plan may be just the right fit for your temporary coverage needs.
Let’s look at five reasons you might want to consider a short-term health insurance plan:
1.Short-term plans are great for filling gaps in your coverage
It’s not uncommon to face a gap in coverage when you sign up for a new health insurance plan or take a new job. For example, if you sign up for a new Obamacare health insurance plan after December 16, 2016, your new coverage is not likely to start until February 1, 2017 at the earliest. If you don’t want to go completely uninsured in the first month of the year, a short-term plan can offer you a valuable layer of protection.
2.Short-term plans cap your liability for many medical expenses
Though short-term plans will not typically provide you with coverage for pre-existing medical conditions or preventive care, they do cover the sorts of medical bills you may face if you unexpectedly injure yourself, become ill, or are hospitalized. When you’re temporarily without standard health insurance coverage, it’s good to know that you have some form of financial protection in case the unexpected happens.
3.Short-term health insurance is affordable
Because of the limited coverage that short-term health insurance plans provide and the limited period of coverage they offer, short-term plans tend to have significantly lower prices than standard major medical health insurance. According to data from eHealth.com, the average monthly premium for short-term coverage in 2015 was $116. By comparison, the average monthly premium for major medical plans selected by non-subsidized eHealth shoppers during the 2016 open enrollment period was $321 for an individual.
4.Short-term coverage is flexible
While short-term health insurance plans are not intended to provide permanent coverage, applicants may indicate how long they want their coverage to continue, within certain limits. You can generally purchase short-term coverage by the month (up to the maximum time allowed by the plan). This allows you to customize your coverage period to suit your personal needs. At the end of your coverage period, you may be able to re-apply for another short-term policy in some cases. Keep in mind that it is possible to be declined for short-term coverage based on your medical history.
5.Short-term health insurance is easy to apply for
Unlike applying for major medical coverage, which can take a long time depending on your needs and whether or not you’re also applying for government subsidies, short-term plans are relatively easy to apply for. What’s more, a coverage decision on your short-term application may be made almost instantly. Coverage under a new short-term health insurance plan can generally begin in a matter of days. You can apply for short-term coverage online through eHealth.com or through other licensed agents or brokers.
In closing, it’s important to note that short-term health insurance plans are not intended to serve as a replacement for standard major medical health insurance plans. If you go without an Obamacare-compliant major medical plan for more than two consecutive months in a single year, you may be subject to a tax penalty on your federal return. This is a government policy to encourage you to purchase an Obamacare-compliant major medical plan that offers more complete coverage, including coverage for pre-existing conditions. Short-term coverage will not protect you from the Obamacare tax penalty or offer the minimum essential coverage in Obamacare-compliant plans, but many people find that short-term coverage provides them with the peace of mind they need when waiting for coverage under an Obamacare-compliant plan to begin.