Short-Term Health Insurance
A temporary health insurance plan for those in-between times
Short-term health insurance (STM), also referred to as temporary health insurance, is a type of medical coverage that is available for shorter durations of time, such as up to three months. Temporary insurance plans have more restricted coverage than major medical but also can have a lower premium.
What Does Short-Term Health Insurance Cover?
Covered expenses for temporary health insurance plans generally include the high-dollar, unexpected care and treatment you may require as a result of an illness or injury – from a serious medical event like a heart attack or stroke to a broken leg or doctor’s office visit due to illness.
Remember, these plans are highly customizable (that’s one of the perks!). The chart below describes benefits that may be covered with short-term medical policies.
Individual insurance plans vary, so you’ll want to read the plan details closely to validate the coverage and benefits you’ve selected and what exclusions apply.
What STM May Cover
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Hospital room and board
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Emergency room – anesthesiology and surgical care
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Diagnostic services – X-rays, laboratory tests and analysis
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Ambulance and surgical services
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Doctor visits
What STM May Not Cover
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Sport-related injuries
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Injuries or illness related to participating in extreme or dangerous activities
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Medical costs resulting from injury from riding an ATV (dirt bike, snowmobile, go-cart), racing with a motorcycle, boat or any form of aircraft
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Treatment of pre-existing conditions
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Any medical expenses incurred prior to the effective date or after the expiration date of your policy
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Tobacco, drug, and alcohol-related treatment expenses
Pros and Cons of Short-Term Health Plans
Here are a few of the pros and cons to consider when you’re thinking about signing up for a short-term health plan.
STM Pros
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- Short-term medical monthly insurance premiums are typically less than major medical premiums, 31.5% less on average[1]. However, STM has less coverage and does not qualify as an ACA plan.
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Apply year-round – There is no official open enrollment period and, in most cases, coverage begins the next day after you enroll online.
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Don’t pay for coverage you don’t need – Plans are highly customizable; you can choose from various health benefit levels.
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Keep Your Doctor – No provider network limitations means you can visit your preferred health care provider.
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Short-term plans can be used alongside other supplemental insurance options such as a hospital plan, dental plan or a prescription drug card (not an insurance product).
STM Cons
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Plans are limited to 30 to 90 days – Under current ACA legislation, short-term plan durations must be 90 days or less.
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Less coverage than major medical – Preventive care and many other essential health benefits such as annual doctor’s visits, prescription drugs, vaccinations, and pre- and post-natal care are not covered. If you think you will need any of the 10 essential health benefits guaranteed by the ACA-qualifying plans, then a short-term health plan may not be right for you.
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Pre-existing conditions are not covered – Historically, short-term plans have not covered pre-existing conditions.
Legal Disclaimer: The above list is not a complete list of pros and cons.
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Who Should Get a Short-Term Health Insurance Plan?
Temporary health insurance plans are best for people who:
- Missed open enrollment for a major medical plan and do not qualify for a special enrollment period
- Are in a new-employee waiting period to enroll in an employer’s health plan
- Require medical coverage for 3 consecutive months or less, such as an alternative to COBRA when in between jobs
- Are a part-time seasonal worker who is unable to obtain coverage through an employer
- Are a few months away from Medicare eligibility
How Short-Term Health Insurance Works
Here’s how to use a short-term health insurance plan:
1
When you apply for short-term health benefits, you pay monthly premiums in order to receive coverage for eligible medical expenses.
2
When you get hurt or sick, go to your preferred hospital and obtain the necessary medical services, presenting your insurance card.
3
The hospital bills your short-term insurance carrier, who pays its share of eligible medical expenses and bills you for your share.
4
When you get billed for the services, you will be responsible for the deductible amount, just like any medical insurance policy.
5
After paying the deductible amount, you are responsible for a percentage of the remaining expense (called “coinsurance”).
6
Once you’ve reached the out-of-pocket maximum for your policy, your insurance plan pays 100% of the remaining covered medical expenses up to the “coverage-period maximum benefit.”
How Much Does Short-Term Health Insurance Cost?
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[1] Centers for Medicare & Medicaid Services. “Fact Sheet: Short-Term, Limited-Duration Insurance Proposed Rule.” Feb. 20, 2018. https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2018-Fact-sheets-items/2018-02-20.html
[2] Lower, A. (2018). Average Short-Term Health Premium Creeps Lower | ThinkAdvisor. ThinkAdvisor. Retrieved 19 April 2018, from https://www.thinkadvisor.com/2017/11/13/average-short-term-health-premium-creeps-lower
[3] ibid.