If you didn’t enroll in health insurance during Open Enrollment or you are trying to reduce your premium expenses, short-term insurance can fill the gap before the next Open Enrollment, from November 1 thru December 15 for a January 1 effective date. There are many differences between short-term insurance and insurance that is Affordable Care Act (ACA) compliant. A major difference is that short-term is not guaranteed renewable, which means there is a predetermined, defined date when the policy ends.
Short-term health insurance is designed for specific needs and is not intended as a substitute for regular long-term health insurance. A more descriptive name could be temporary health insurance because it bridges insurance gaps for people in transition, with coverage periods ranging from 1-12 months. A few sample scenarios:
Starting a new job. If you are on a new job but must work for 90 days before group plan benefits kick in, short-term coverage can fill the gap. It will provide benefits until you move to an ACA-compliant plan with your new employer.
Between jobs. If you are between jobs, have been laid off or have lost your job, a short-term plan can be an alternative to C.O.B.R.A. or appropriate once C.O.B.R.A. has been completed.
Missed open enrollment. Many people think they can enroll in an ACA plan any time during the year. Not so. For coverage after open enrollment, you must have a qualifying event:
- loss of income
- loss of employment, or loss of your spouse’s or dependent’s employment
- change in your personal situation including marriage, divorce, legal separation, or death of a spouse
- birth, adoption, or death of a dependent, or a dependent’s loss of coverage because they have turned 26
If there is no qualifying event, a short-term plan until the next Open Enrollment will provide coverage.
Early retirement. If you have retired early and are waiting for Medicare, a short-term plan can fill the gap until you reach Medicare eligibility.
Short-term plans offer great flexibility and can be more affordable than traditional health insurance. You get to name the term, anywhere from 1-12 months. And you can drop the plan at any time or apply for another term, as long as your health hasn’t changed significantly. Because short-term policies have a defined start and stop date, the risk is less so premiums are highly competitive. You also can choose from a range of deductible and payment options. Applying is easy too. The application can be completed quickly, and because there is no underwriting, coverage can be effective at midnight following the application submission. In Texas, two carriers offer short-term plans, National General and United HealthCare.
Risks associated with short-term insurance coverage are often overlooked. Coverage is not as robust as under the ACA. Importantly, short-term insurance will not cover pre-existing conditions. Because short-term coverage is not medically underwritten, there are no benefits for medical treatment, including prescription drugs that existed before the policy became effective. So let’s say you’ve been treated for high blood pressure and/or have been taking medication. Under a short-term policy you will get no benefits related to this specific condition.
Short-term coverage will eventually end and you’ll need to get new coverage. It is important to understand that benefits received during short-term coverage will be considered a preexisting condition on the next short-term policy and there will be no benefits for that condition. This is not significant for minor conditions, but for serious conditions requiring long-term treatment, the short-term will only provide benefits during the first term of coverage. If the condition is extremely serious, it might be impossible to secure a second short-term policy. For this reason it is important to secure short-term coverage for a period long enough to reach January 1st, which is the earliest effective date for ACA plans.
And Key: Short-term coverage doesn’t meet the essential benefit requirements of the ACA so you’d still be subject to the personal responsibility fine.
Short-term health insurance can be beneficial in filling a specific, defined gap in coverage. It should not be used in place of long-term coverage because the benefits including ease of application and the lower cost aren’t outweighed by the potential exposure. The most ideal time to enroll in short-term coverage is when the ACA open enrollment period begins in six months or less and you need to fill a specific coverage gap.
STATESIDE CAN HELP!
Stateside Insurance Services, since 2003, has focused on providing comprehensive health insurance information, responsive customer service and expert industry knowledge for Texas consumers. Stateside has annually been recognized by health insurance carriers and the Health Insurance Marketplace as a Top Producer in Texas.
Whether the health insurance policy is for an individual, family, small business or supplemental Medicare coverage, Stateside dedicates the time, and our deep industry expertise, to ensure our clients have identified the best health insurance plan for their specific needs.
Stateside is available to answer any general questions regarding your coverage options, can provide a subsidy determination, and even assist in creating and submitting online applications for ACA compliant plans during an Open Enrollment or throughout Special Enrollment periods.
By using the Telephone Appointment System, clients can take advantage of scheduling a health insurance discussion when convenient for their schedule. During Open Enrollment phone appointment availability is expanded to include extended hours and weekends.