Short-Term Health Insurance Explained

April 15, 2020

What exactly is Short-Term Health Insurance? Since the passing of the Affordable Care Act (ACA), this topic has been an ongoing source of confusion for consumers.

A Short-Term Health Insurance plan provides temporary coverage to help pay for hospital and medical claims when employer health insurance or ACA coverage is not available or affordable. Until recently, these plans could only be purchased to provide coverage for up to three months. This type of policy can be a good fit for people that:

  • Missed the ACA Open Enrollment
  • Do not have access to employer-based coverage
  • Cannot afford coverage available through their employer or the Marketplace
  • Are between jobs or must satisfy a new employment waiting period
  • May be coming off a parents’ policy at age 26
  • Recently divorced
  • Are without coverage due to loss of income during these unprecedented times of the COVID-19 virus

In 2019, the “Tri-Agency” consisting of the U.S. Department of Labor, the U.S. Department of Health and Human Services and the Internal Revenue Service issued regulations that allow Short-Term or Temporary Health Insurance Plans to provide coverage for up to 364 days with coverage period extensions of up to 36 months.

Short Term Health Insurance Form

These changes allow for greater use of plans that were never designed to be a replacement for traditional comprehensive major medical coverage. This comes at a time when a growing number of people are finding ACA monthly premiums to be unaffordable for a growing number of reasons or unaffordable due to high deductibles and out of pocket costs.

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The Value of Short-Term Health Insurance

It has been said, “You get what you pay for.” In the case of Short-Term Plans, you pay less for what you don’t get. Most Short-term Plans are designed to exclude coverage for preexisting conditions, maternity care, and mental health/substance abuse treatment. Short Term Plans are not ACA compliant and do require an applicant to pass underwriting guidelines to be approved.

As a result of these limitations, Short-Term Plans are designed to be an affordable option, saving individuals or families as much as 80 percent when compared to ACA coverage, especially when no subsidies are available or COBRA continuation rates when there is a loss of employer-based coverage.

In addition, Short Term Plans can be purchased anytime throughout the year, many times with same day approval, offer flexibility in benefit designs, deductibles and cost sharing requirements, expanded use of doctor and hospital networks and can be canceled at any time. Short-Term Coverage may be an affordable option that meets their specific needs.

Stan Sieniawski of InsureOne Benefits
Stan Sieniawski
Vice President, Practice Leader
InsureOne Benefits