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The Long and Short of it: Short-Term Health Insurance

What is it?

Although you might think a couple months without health insurance is nothing to worry about, there is always a possibility of an accident or illness that could be financially devastating. Accidents happen, and taking measures against their detrimental effects is critical; this is why health insurance is a necessary safeguard. Short-term health insurance typically has the same benefits as a major medical plan, but is designed to specifically protect you against unforeseen illness or injury. Thus, preventative care is usually not included.

Who is it for?

This type of health plan is good for those who are:

·      Expecting approval on a permanent health insurance plan

·      In-between group plans for less than 12 months

·      Recent college graduates currently without coverage (perhaps with an expected start date for a new job with benefits)

·      Someone who works seasonally

How can you get it?

This type of health insurance isn’t offered in all states by all carriers, so the best way to find out what applies to you is to call a licensed health insurance agent at 866-602-8466. You should keep in mind that underwriting for short-term plans is much more simple than for a major health plan, and your eligibility is decided by answering a few simple questions. Some carriers we recommend are: HPA, Golden Rule, United Healthcare, and Assurant Health.

What are the benefits?

With this type of insurance, coverage begins immediately and is guaranteed to continue for 6 to 12 months. It also covers all eligible dependants. These plans are generally 20-30% less expensive than a more affordable major medical plan, and are thus a great complement to a major plan if you’re facing a long underwriting period without coverage.

What are the risks?

If you meet with a serious illness or accident while under coverage by a short-term health plan, you’ll be covered through the plan’s duration, but because short-term plans aren’t regulated by HIPAA, they are not guaranteed-renewable. This term means that the insurance carrier may decline subsequent attempts to apply for coverage after your initial period of coverage ends. If you re-apply and get approved, any medical conditions diagnosed during the first period of coverage would be excluded from your new policy.

Moreover, if you were recently laid off, know that buying short-term health insurance renders you ineligible for COBRA. Generally speaking, short-term plans are a temporary-fix, not a replacement for a major medical plan.

Here’s an example of how short-term health insurance works:

Jane bought a short-term medical plan with a $1,000 deductible, 80/20 co-insurance (meaning the carrier pays 80%, and Jane pays 20%), and a $5,000 out-of-pocket maximum (OOPM). Jane gets hit by a bike and breaks her leg, and her medical bill comes out to $15,000. Jane pays her $1,000 deductible, meaning that $14,000 would remain. She would then pay 20$ of the remainder until she meets her OOPM of $5,000. After meeting this OOPM, the insurance carrier covers 100% of the medical costs, within the policy’s limitations. Jane’s total OOP expense: $1,000 deductible + $5,000 co-insurance = $6,000. The insurance carrier pays $9,000.

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