What Is Short-Term Health Insurance?

A Complete Beginner’s Guide
Jenifer Dorsey
2018-09-19 April 19th, 2018 |
Read time: 12 minutes

Life happens. You’re in between jobs. You graduate college and are looking for a full-time gig with health insurance. You’re going through a divorce and lose access to your spouse’s major medical plan. How will you pay for healthcare?

When you’re uninsured and worried about unexpected medical bills, it’s time to consider short-term health insurance.

What is short-term health insurance exactly? A short-term health plan, (also referred to as “short term medical” and “temporary health plans”), provides temporary benefits that help pay for healthcare when you don’t have major medical insurance.

This coverage lasts for as few as 30 days, which means it’s just right when you’re looking for a COBRA alternative between jobs or need benefits until your employer benefits begin.

Why buy temporary health coverage?

You might be tempted to skate by uninsured until you have major medical insurance again, whether through a job or a government marketplace.1 But it’s important to keep in mind that if you need healthcare in the meantime, you could wind up paying for it 100% out of pocket. That’s where short-term medical comes in. The benefits of short term healthcare coverage include:

1. Financial protection

Short-term plans can help pay for unexpected healthcare when you need covered services for an illness or injury. After you meet your selected plan’s deductible, your benefits will help with covered expenses.

2. Affordability

When you’re in between major medical plans (i.e., Affordable Care Act or Obamacare), you might be looking to save money. And, generally speaking, short-term premiums tend to cost a fraction of major medical premiums.

For example: At the end of 2016, the average short-term policy cost $124 a month and the average, unsubsidized Obamacare plan cost $393 per month. Your plan could cost more or less, depending on what you choose.

3. Flexibility and freedom

Short-term coverage is available year-round. There isn’t a special open enrollment period, which means you can apply anytime.

Most healthcare providers accept temporary health insurance as they do major medical. It’s also possible that you can choose your preferred doctors and hospitals because not all short term health plans require you to visit network providers.

Furthermore, some have optional networks with access to discounts when you see a provider who belongs to the network. Read plan details to determine what, if any, network restrictions may apply to the coverage you choose.

4. Custom coverage

The phrase “one size fits all” doesn’t apply to temporary health insurance plans. They can last anywhere from 30 to 90 days, depending on your needs. (And, they may soon be available for up to 364 days. Read more here.) You can also choose from a range of deductible options that help you strike the right balance between premium and out-of-pocket affordability.

5. Fast benefits

Short-term plans can be quickly obtained. As mentioned earlier, they are available year-round.

You can apply and enroll online 24 hours a day, within just a few minutes by filling out an application and answering a brief health questionnaire. If your application is accepted, you can choose begin coverage as early as the next day.

What healthcare will a short-term plan cover?

You may already know that short-term medical benefits are not the same as major medical benefits (i.e., an ACA plan). They are not subject to the Affordable Care Act (ACA), so they won’t have essential health benefits or be required to cover all of the preventive services listed in the ACA.

Even so, temporary medical plans do include a range of benefits that offer some financial protection from unexpected medical bills that result from serious medical events like a heart attack or stroke, as well as less-serious medical events such as a broken leg or doctor’s office visit due to illness.

Here are some examples of the types of medical care commonly covered by short term health plans:

  • Hospital room, board and general nursing care
  • Emergency room visits
  • Inpatient doctor visits
  • Doctor office visits
  • Surgical services
  • Intensive or specialized care

Furthermore, some plans even cover a few basic preventive services such as a Pap smear, mammography or a prostate antigen test.

Others may include benefits for pre-existing conditions. It’s important to ask questions to verify what benefits the plan you are considering includes or does not include. Short-term benefits vary from policy to policy.

How does short-term health insurance work?

Temporary plans function a lot like major medical plans. You present your health insurance ID card at the time you receive healthcare services. Your healthcare provider bills your short-term health insurance company, which then pays the amount covered by your policy. You will then be billed for your share.

How much does it cost?

Temporary coverage typically costs less than an unsubsidized Obamacare plan. Below you will find STM and ACA sample rates for a 35-year-old woman living in North Carolina.2

Plan Type Unsubsidized Premium Deductible
Secure Net Short-Term Plan (HealtheDeals.com) $114.04 $5,000
Bronze ACA Plan $469.85 $6,650
Short-Term Plan Savings: $355.81 $1,650

Keep in mind that you can’t apply for ACA subsidies (i.e., premium tax credits and cost-sharing subsidies) for short-term medical insurance.

Want to find out how much it will cost you?

Estimate your monthly premium and see plan options by getting an instant short term medical quote. It takes 1-minute and you will get a range of short term health plans to choose from.

Is short-term health insurance right for me?

Short term medical insurance can be helpful for many people, but it’s not necessarily a fit for everyone. Here are three things to keep in mind when making your decision:

Consider your life stage and circumstances.

Temporary coverage can be a smart choice for those who:

  • are in an employer waiting period,
  • missed open enrollment,
  • are recently divorced and no longer covered on a spouse’s plan,
  • are not eligible for special enrollment,
  • recently aged off their parent’s health insurance when they turned 26.

Consider your personal healthcare needs and budget

Some questions to ask yourself include:

How long will you need coverage? Currently, short-term policies are capped at 90 days, and not all states allow you to re-apply for a new policy once yours has expired. If you need long-term coverage, you may want to consider an ACA plan.

Do you have pre-existing conditions? Many temporary health plans do not cover pre-existing conditions, though some do. You will be required to answer some health questions when applying for short-term coverage, and your answers could impact your eligibility.

Are you eligible for an Obamacare subsidy? If you qualify for premium tax credits and cost-sharing subsidies to help reduce your monthly health insurance payments and covered out-of-pocket expenses, you may want to apply for an ACA plan. Short-term medical is not eligible for subsidies. Find out if you are eligible for an ACA subsidy.

Consider your ACA exemption status

Under the Affordable Care Act’s individual mandate, you can go without minimum essential coverage for a single gap up to 3 months out of the year.3 Beyond that, you could owe a tax penalty unless you qualify for an exemption. Short-term plans are not considered minimum essential coverage.

How do I choose a short-term plan?

Once you’ve decided that temporary coverage is the right option for you, you’ll have to determine which specific plan to buy. When shopping around and comparing plans, here are some details to consider:

  • Premium: This may be a monthly or annual rate. A lower monthly premium usually means a higher deductible. By choosing a lower premium plan, you’re banking on not having to use your insurance.
  • Deductible: A lower deductible amount usually means a higher monthly premium payment.
  • Out-of-pocket limits: This is the maximum you will have to pay out of pocket for the duration that the policy covers.
  • Pre-existing condition coverage: What pre-existing conditions, limitation, and what amount of benefit will be provided, typically up to a maximum limit.
  • Network requirements and participating providers: Are any discounts available for using certain healthcare providers?
  • Company ratings: How is the insurance company rated, including a BBB rating and AM Best rating.

You can’t enroll in STM through an Obamacare exchange, so where can you find it? You can start by getting a quote on this website or calling the number on your screen to speak to a certified advisor today.

Next steps

Learn about all the options for purchasing short term health insurance, from this website to your local insurance agent.

Learn about upcoming changes to short-term medical.

Get a quote. Find out how much short-term coverage could save you.

Looking for a local producer? Use Agent Finder.

 

Begin Coverage in 3 Easy Steps!

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Step 1: Get a quote within seconds
Step 2: Compare multiple plans
Step 3: Finish application online
Originally Published On July 1st, 2016

Footnotes