The benefits of a short-term plan are lesser known than perhaps a comprehensive health plan, but one could help significantly during certain life events. Temporary health insurance is just that — a plan that lasts for a limited time — and many carriers offer these plans as a bridge to your next source of coverage. Especially when you unexpectedly lose your insurance, a short-term medical plan is a great option when you’re subject to the waiting periods and application processing times of a major medical plan.
With the introduction of the health insurance marketplace, another waiting period has been introduced on top of group plan waiting periods and time it takes for your individual insurance plan to become effective. As COBRA becomes less appealing to laid-off workers, especially as subsidized coverage is a more cost-effective alternative, the time it takes for your insurance to kick in may be longer than you want. Choosing a health plan shouldn’t be a rushed process, and temporary coverage allows you that window of time you need to stay covered while carefully deciding on your next policy.
Advantages of a Temporary Plan
- Very affordable — get covered for as low as $30 per month for certain applicants.
- Get insured almost instantly — approval and issue of coverage is often 24-72 business hours depending on the carrier.
- Choose the length of time you need — from 30 days to 3 months (you may reapply after expiration if your state laws permit).
- Stay covered during transitional periods.
Looking at various life occurrences in more detail, there is plenty of use for short term medical coverage. Say you need coverage immediately, yet do not have a “qualifying life event” required by the Affordable Care Act to apply for a long term health plan. You can buy a temporary health plan that includes coverage for hospital care, emergencies and office visits. Short Term Medical insurance policies are now limited to a 3-month maximum term, however, based on the state where you reside, you may purchase a new short-term plan after your current plan expires (See “Consecutive Terms” below).
Health Insurance Companies issue short term plans much more quickly than long term major medical plans, and they can be purchased at any time of year, regardless of your eligibility for a Special Enrollment Period. As Obamacare eliminated PPO plans on the individual and family market in many states, Short Term Coverage also provides that network flexibility and health plan portability. Many, if not all, of our current Short Term plans are PPO.
Losing Group Insurance
Instead of paying double your old premium with COBRA, why not pay a fraction of it with a temporary plan? Both are short-term, and assuming you’re also out of work when you’ve lost job-based coverage, unemployment is not a financially convenient time to take on your employer’s share of the premium. Short-term medical can provide a sufficient amount of benefits for the time you search for a new job and apply for their coverage, or enroll in an individual plan.
While it’s not perhaps as common anymore due to the dependent coverage rule of the ACA, student insurance is still a frequently purchased form of coverage. No major educational institution will let you settle in on campus without it, and once you graduate, you only have a few months until the plan expires. As job searching, relocating, and other life decisions take priority at this time, finding coverage in time may not be your primary concern. Luckily, short-term plans can cover you almost instantly after applying and allow you enough time to choose a great health plan while getting your other post-degree plans in order.
Dependent Coverage Age Limit
On your 26th birthday, if you’re a dependent on your parent’s health plan, your coverage will either end immediately or last until the end of the coverage year, depending on the plan. Whether you plan ahead and find out when your benefits terminate, or wait until the last minute when they expire, a plus of temporary coverage is that you can get approved in as little as one day.
Group Plan Waiting Periods
If you’re just starting a new job that offers health insurance, you might not be able to get a free annual exam for a few months until you’ve endured the waiting period. As waiting periods take anywhere from one to six months after you apply for group coverage. this is a perfect time to enroll in a short-term plan. Your preventive care won’t be free, but it won’t hurt your bank account either.
Missing Open Enrollment for Exchanges
If you can only afford coverage on your state’s health insurance exchange and you didn’t apply by March 31, you can still get coverage through a short-term policy. These plans are even more affordable than those on the marketplace, which is because they don’t offer the same degree of coverage and benefits. However, they will help you get the care you need for much less than it costs to visit the ER or a physician without any coverage at all. You can stay covered under a temporary plan as long as 12 months in some cases, which will last you through the next year’s open enrollment period, when you can enroll on time in a subsidized major medical plan.
Applying for Individual Coverage
Even if you don’t miss the deadline for open enrollment or if you apply for individual coverage off the exchange, you may still experience a small window of uninsured time. To make the time without coverage less worrisome, a temporary plan can cover you for as few as four weeks while you wait for your comprehensive benefits to take effect. It can take up to a month for benefits to become active, especially as most individual plans begin on the 1st of the month.
How Short-Term Plans Work
Temporary plans are quick and easy to apply for, as there are no medical questions asked when you apply. Therefore, the insurer doesn’t have to do any sort of underwriting before they decide to issue coverage. As they only last a limited time, these plans cannot be renewed — otherwise, this would be the least expensive coverage option available. Under 2017 federal guidelines, all short term health plans must expire after 3 months.
You can choose your deductible based on what fits your budget, as with an unlimited plan. Similar to other coverage, the higher your deductible, the lower your premium. As for medical care, you can choose any doctor or hospital you want. You can also purchase a short-term plan for just a child if your child is waiting to be accepted for CHIP coverage or another health plan. Most plans give you the option of paying in small monthly installments or all at once with an up-front payment.
Benefits vary based on the insurer you choose. They can include more or less than what’s featured below, but to generalize the array of short-term plans from different carriers, these are what can typically be expected. Additionally, even if you apply for a plan with a certain selection of benefits, that can vary based on what the insurer decides to cover.
- Urgent care centers
- Outpatient surgery
- Laboratory and diagnostic testing
- Office visits
- Emergency care
- Some prescription drugs
- Preventive care