What Is Short Term Health Insurance?
Short Term Health Insurance is major medical insurance that provides coverage for a defined period of time and generally has a much lower monthly premium than other forms of major medical health insurance. There are two other big advantages of Short Term Health Insurance over other forms of major medical insurance such as an Obamacare (ACA) plan or an employer-based plan. First, you can use your Short Term Health Insurance plan to pay for services from ANY doctor or hospital. Yes, you can keep your doctor! Second, Short Term Health Insurance plans have no open enrollment restrictions, so you can apply at anytime. You will be notified within minutes if your application is approved, and you can use your coverage as early as the next day! At AgileHealthInsurance, we specialize in affordable Short Term Health Insurance plans, and we are committed to offering consumers flexible choices.
- 1. Short Term Health Insurance plans can be far more affordable than an ACA plan even after you consider the tax penalty.In particular, those who do not qualify Obamacare plan subsidies will be hit by especially high premiums. EXAMPLE: A 29 year old woman making $33,000 per year in South Florida would pay approximately $2,200 per year for a bronze-level Obamacare plan. For less than $500 per year she can purchase four Short Term plans back-to-back with a comparable deductible, pay the tax penalty of $695, and save over $1,000 per year.
- 2. You can still get an ACA plan if you do develop a condition that prevents you from reapplying for a Short Term Health Insurance plan.Affordable Care Act health plans cannot deny coverage for pre-existing conditions. If you do develop a health condition,you might not be eligible for a subsequent Short Term Health Insurance plan, but you can secure an ACA plan during Open Enrollment.
- 3. Short Term Health Insurance is Flexible.The ACA requires each ACA plan to include 10 essential health benefits. Maternity services is one of these benefits and is required to be covered by all Obamacare plans. As a simple example, a single male who buys an ACA plan will have maternity coverage that he’ll never need. In contrast, Short Term Health Insurance offers streamlined benefits--those that a healthy member is more likely to use--hospital, doctor, x-ray and other treatment benefits in case of illness or an accident.
- 4. There is No Annual Open Enrollment Period.If you are not enrolled in a plan before the Open Enrollment deadline, you won’t be able to purchase an Obamacare plan unless you meet certain special requirements. In contrast, you can enroll in a Short Term Health Insurance plan at any time.The ACA Open Enrollment Period is the six weeks between November 1, 2017 and December 15, 2017.
Short Term Health Insurance isn't for everyone. People with certain chronic conditions, poor health, or complex medical needs are often better served by an ACA plan, which offers benefits for numerous conditions including mental health needs. . Additionally, people who have had a significant health event or medical condition in the past five years may have a hard time finding a Short Term Health Insurance plan that will accept them or provide coverage for their pre-existing condition.
Short Term Health Insurance might be right for you if you:
- Have missed the annual Open Enrollment periods for Obamacare/ACA plans.
- Have a waiting period before you can enroll in another major medical insurance plan.
- Are in between jobs, a part-time or temporary worker, or looking for a less expensive alternative to COBRA.
- Are a student, a recent graduate, or have aged out of your parent’s health plan.
- Have retired but are too young for Medicare.
- Your preferred doctor or hospital doesn't accept Obamacare or an Obamacare plan isn't available in your area.
- Like millions of Americans, you simply can’t afford Obamacare
Affordable Care Act plans typically have broader benefits than those found in Short Term Health Insurance plans and, without the premium subsidies available to some qualified purchasers, cost much more than Short Term Health Insurance plans.
All ACA individual health plans must have the "10 essential health benefits." Short Term Health Insurance plans, in comparison, do not have a standardized set of benefits. Short Term Health Insurance plans usually offer what would be described as streamlined "major medical coverage" that covers healthcare costs in the event of accidents and illnesses. Most Short Term Health Insurance plans also cover doctor visits for routine illnesses and injuries.
The chart below details some of the major benefit differences between Short Term Health Insurance and Affordable Care Act plans. It is important to note that Affordable Care Act plans do not deny care for pre-existing conditions nor do they reject applicants based on health problems.
|Short Term Health Insurance Plans||Affordable Care Act Plans|
|Coverage availability||Apply any time and get coverage as early as the next day||Apply only during Open Enrollment (or Special Enrollment due to a qualifying event) and get coverage on a standardized effective date 2-8 weeks in the future.|
|Coverage duration||1 month to 3 months. Many states allow you to reapply for back-to-back coverage.||As long as the plan is available. You can change plans during Open Enrollment (or Special Enrollment with a qualifying event)|
|Prescription drug coverage||Many Short Term Health Insurance plans provide a drug discount card but do not provide drug coverage. Some newer plans have a prescription drug coverage option for generic drugs not associated with a pre-existing condition. Brand name drugs and specialty drugs are typically uncovered||Minimum of 1 drug per class must be covered but the minimum number of drugs per class is often more due to the benchmark chosen for each particular state.|
|Maternity and newborn care||Complications of maternity are covered but not standard childbirth services.||Full coverage. Applicants cannot be denied based on pregnancy as a precondition.|
|Mental health services||Coverage is included only when mandated at state level.||Coverage included, but states vary on their definition of “mental health” services, so while some do include learning disabilities or conditions like Autism, other states do not.|
|Substance use disorder services||Coverage is included only when mandated at state level.||All ACA plans have full coverage.|
|Rehabilitative and habilitative services and devices||Coverage is included only when mandated at state level.||All ACA plans have full coverage.|
|Preventive care||Some plans have selected preventive care benefits with cost-sharing. However, most plans do not cover preventive care services.||Preventative services must be provided without cost-sharing|
|Pediatric services - oral and dental care||Coverage is included only when mandated at state level.||All ACA plans have full coverage.|
|Healthcare provider networks||Short Term plans typically have broad acceptance among healthcare providers. Some have a preferred network with negotiated pricing for healthcare services and a larger non-preferred network where the plans pay 'usual and customary' fees for covered healthcare.||These plans have been noted for a significant use of "narrow networks" to increase the ratio of enrollees to healthcare providers.|
|Uninsured tax penalties||The maximum penalty is the national average premium for a bronze plan. For 2016, the tax is 2.5% of modified adjusted gross household income or $695 per person, whichever is greater.||ACA plans meet the requirements for avoiding the tax penalty.|
|Coverage of pre-existing conditions||These plans evaluate health status and pre-existing conditions when processing an insurance application and determine whether the applicant is approved or rejected for coverage.||These plans do not consider health status or pre-existing conditions when processing an insurance application.|
Short Term Health Insurance is a great choice for many consumers, but there are certain considerations that you should take into consideration when looking at Short Term Health Insurance as a health insurance option.
- 1. Short Term Health Insurance does not prevent the Obamacare tax penaltyBecause Short Term Health Insurance plans do not meet the requirements set by the Affordable Care Act, you may still be responsible for paying the tax penalty called the “Shared Responsibility Tax.” Since 2016, the tax is either 2.5% of modified adjusted gross household income or $695 per person, whichever is greater. For the 2016 tax year, the Internal Revenue Service has indicated that it will process tax-returns even if a person fails to indicate that they have ACA-compliant health insurance. This policy may change from tax year to tax year. You can learn how to calculate the monthly cost of short term health insurance with the tax and compare it with an Obamacare premium here.
- 2. Short Term Health Insurance plans are not renewable, but instead require you to reapply if you wish to add another period of coveragePart of the Affordable Care Act dictates rules for non-ACA plans. As a result, Short Term Health Insurance plans cannot be automatically renewed, and you will need to submit a new application.
- 3. You can be denied coverage due to pre-existing conditionsLike medical insurance before the ACA, Short Term Health Insurance plans can deny your application based on your current and past health conditions. Insurers will often review up to five years of your health history.
- 4. Short Term plans are not required to have the same coverage benefits as Affordable Care Act (Obamacare) plansThe Affordable Care Act established a very clear set of minimum coverage benefits called the "10 essential health benefits." Short Term Health Insurance is a streamlined type of major medical insurance and does not cover all of the ACA’s “essential health benefits” such as maternity or mental health. As a result, the premiums for Short Term Health Insurance are often significantly less expensive.
Yes. Since Short Term health insurance plans do not meet the minimum requirements of the Affordable Care Act, the plans do not qualify as "minimum essential coverage" and, consequently, their enrollees must pay what is called the “Shared Responsibility Tax.” For 2016, the tax is either 2.5% of modified adjusted gross household income or $695 per person, whichever is greater. You can learn how to calculate the monthly cost of Short Term health insurance with the tax and compare it with an Obamacare premium here.