Short-term health insurance was designed to provide coverage for people who are in between coverage options, are exempt from the mandate to buy insurance, or want catastrophic health coverage outside of open enrollment. Short-term coverage does not prevent you from having to pay the fee for not having long-term health insurance coverage (Obamacare), but it does protect you and your family against the crippling debt that medical costs can have on the uninsured.
Some typical reasons that people get short-term health insurance are:
- Between jobs
- Waiting for employer group coverage to start
- Waiting for Marketplace coverage to start
- Traveling outside of network area
- A recent college graduate
- A temporary or seasonal employee
- A dependent no longer covered under parents plan
- on strike, laid-off, or a terminating employee
Pros and Cons of Short Term Insurance
Changes in 2021
President Trump signed an executive order that brought significant changes to short-term health insurance in 2020. These changes were intended to give more options for health insurance to those that do not want to pay for ACA health coverage.
One of the major changes coming to short-term coverage is it will now be able to be purchased in durations of up to 36 months. These plans will be able to be renewed for up to three years of continuous coverage. Another major change coming to short-term plans is that carriers will be required to provide information about how the short-term health insurance policies differ from their long-term counterparts. These changes will allow policy holders more time to find long-term plans that are right for them as well as provide more information to them about the policies.
The federal mandate for having health insurance were eliminated in 2019. This means that those whose insurance does not meet the ACA minimum required coverage will no longer have to pay a 2% income tax fee. However, short term plans are not available in states such as New Jersey and California that a state mandate.
If you chose to cancel your short term plan coverage at any point, you may do so. If the coverage is covered during the first 10 days of purchase, you receive a full refund. If the coverage is cancelled during the first 10 days, you usually receive a prorated refund based on the unused benefit.
You will usually be denied short-term health insurance coverage if any of the following apply to you:
- Cancer or tumor
- Heart disease (including prior heart attack, heart surgery, or chest pain)
- COPD (chronic obstructive pulmonary disease) or emphysema
- Crohn’s Disease
- Liver Disease
- degenerative disc disease
- rheumatoid arthritis
- Kidney Disorder
- degenerative joint disease of the knee
- alcohol abuse or chemical dependency
- any neurological disorder
- HIV or AIDS
- In the process of adoption
If you are looking for insurance to cover your pre-existing conditions, we can refer you to an agent who can help you find a health insurance plan that to cover these conditions.
Call (312) 726-6565.
What does short-term health insurance not cover?
Any of the following may not be covered by short-term health insurance depending on the carrier:
- Skin care such as acne or moles
- Chronic pain
- Sports injuries
- Injury occurring while intoxicated
- Any joint replacement surgery
- Hernia surgery
- Maternity costs
- Some brand prescription drugs
- Substance abuse counseling
- Mental health care
Who is short-term health insurance good for?
Short-term health insurance is a good option for anyone that is currently healthy but wants to make sure that they are covered in case of a sudden illness or injury. Remember that if someone has a pre-existing conditions, they may be rejected from short-term plans and will definitely not get any of the costs associated with that pre-existing cost paid for with their insurance. While the benefits are not extensive, they do safeguard you from financial catastrophe. These plans are better for single adults or couples without kids because the high deductibles.
Who should avoid short-term health insurance?
While short-term health insurance can be a great plan for many, the following groups of people should avoid it:
- Anyone with a significant, on-going pre-existing condition
- Pregnant women
- Anyone with a history of substance or alcohol abuse that may enter a rehab program
- Families with special needs children
- The elderly
- Anyone that uses a large amount of prescription drugs
- Anyone that wants more comprehensive health insurance coverage
How much cheaper is short-term health insurance than long-term plans?
Long-term health insurance policies usually cost around $400 in premiums for individuals and over $1,000 for families. The average short-term health insurance plan will save individuals almost $300 and $750 for families.
What is the average cost of short-term health insurance?
The average cost of short-term health insurance for individuals is about $115 a month. This number increased to about $275 if you want to get an entire family covered by the plan. This number can be deceiving, though, because it does not account for the high deductible that short-term policy holders must pay. The average deductible for individuals is $5,000 and $15,000 for families. The estimates above also do not account for the tax burden of not having a short-term plan. However, this will no longer be an issue in 2021.
How the deductible works for a family in a short-term plan
The short-term deductible for a family works the same as the deductible of a long-term plan. Usually, there is a both a deductible for the entire family and for each individual in the family. If the deductible for each family member is $500 for each individual and $1500 for the family, a combined total of $1500 must be paid before the insurance kicks in for the family.
However, if over $500 is spent on one individual in the family, then the insurance will cover that person (and only that person).
Are short-term health insurance plans worth it?
As with most things, this really depends on both your perspective and position. Anyone that is not covered and is worried about not being covered in an emergency should definitely sign up for short-term health insurance. Those that are healthy, have pre-existing conditions, or have a large number of prescription drugs and are looking for more extensive coverage may want to go the long-term health insurance. It really comes down to how much you are willing to pay and what benefits you are looking for.
When will these extended short-term plans be available?
They are available now. The first day that health insurance carriers started carrying the new, longer short-term plans was October 2, 2020. The date that companies begin selling these plans varies depending to carrier, some starting as early as September 14, 2020 while others have decided to wait until the first day the policies go into effect on October 2.
Is there a limit to the amount of benefit that I can receive from a short-term plan?
Many short-term plans do have a limit to the benefit that policyholders receive from them. This number varies on a variety of factors including: plan, carrier, state, and individual being covered. Often, short-term health insurance providers cap this amount at about $1,000,000, but the cap can be different than this amount.
Do most health insurers offer short-term health insurance coverage?
When 2019 began, many health insurance providers had decided not to provide short-term because of the public's reluctance to buy them because of how short the policies were.
However with the recent changes to the structure of how short-term health insurance plans work, there has been an increased number of carriers that are willing to provide short-term plans. Roughly 75% of carriers nationwide will be providing short-term health insurance plans in 2021.
Is there a risk applying for short-term coverage?
No, if you do not qualify for short-term coverage you can still enroll in a marketplace plan (with 60 days after qualifying event, or during open enrollment) with no exclusions for pre-existing conditions.