Miss open enrollment? You’ve got options.
If you missed Obamacare's deadline, your health insurance options are limited, but you can still get coverage – including short-term plans
April 28, 2014
The 2015 general open enrollment period begins on November 15, for coverage effective no earlier than January 1, 2015. Native Americans can enroll year-round, as can people who qualify for Medicaid. And applicants who have a qualifying event will have access to a special open enrollment window to shop on or off-exchange, with premium subsidies available for eligible enrollees.
But without a qualifying event, health insurance is not available outside of general open enrollment, on or off-exchange. (Nevada is an exception: off-exchange plans in Nevada are available for purchase year-round, but the carrier can impose a 90-day waiting period before coverage takes effect).
Unfortunately, this fact is catching many people by surprise. A Kaiser Family Foundation survey conducted in March found that only 39 percent of uninsured Americans were aware of the fact that open enrollment was ending on March 31.
For most people, the options for the next several months will be limited to policies that are not regulated by the ACA. This includes short-term insurance, some limited-benefit plans, accident supplements, critical/specific-illness policies, dental/vision plans, and medical discount plans.
Closest thing to ‘real’ insurance
Some of these policies are a good supplement to regular major medical health insurance. But most of them are not a good option to serve as stand-alone medical coverage – except short-term health insurance.
Short-term coverage is the closest thing you can get to “real” health insurance if you find yourself needing to purchase a policy outside of open enrollment. Most plans last from one to six months, although in some states, short-term plans are available with a duration of 364 days. (The definition of a short-term plan is a duration of less than 12 months.) They are not renewable, but many states and carriers allow consumers to purchase two consecutive short-term policies.
For people who are healthy and don’t have pre-existing conditions, short-term policies function basically the same way many health insurance policies used to before the ACA’s reforms were introduced. And compared with the premiums for ACA-compliant individual major medical plans, short-term policies are far less expensive.
Although premium subsidies are not available for short-term plans, the retail prices on these policies are very affordable. (If your income makes you eligible for the ACA’s premium subsidies, make sure you enroll in a plan through your state’s exchange when 2015 open enrollment begins in November.)
Some short-term plans have provider networks, but others allow you to use any provider you choose. Unlike ACA-compliant plans, short-term policies have benefit maximums. But the limits tend to be much more reasonable than the infamous “mini-med” plans that barely covered a few nights in the hospital.
Lifetime maximums of $750,000 to $2 million are common on short-term plans. While this is not as good as regular individual insurance plans that no longer have annual or lifetime benefit caps, it’s roughly similar to a lot of the plans that were available just a few years ago in the individual market.
Ease of application
The application process is very simple for short-term policies. Once you select a plan, the online application is much shorter than it is for standard individual health insurance, and coverage can be effective as early as the next day.
There are no income-related questions (since short-term policies are not eligible for any of the ACA’s premium subsidies), and the medical history section is generally quite short – no where near as onerous as the pre-2014 individual health insurance applications were.
Keep in mind that although the medical history section generally only addresses the most serious conditions in order to determine whether or not the applicant is eligible for coverage, short-term plans all have blanket disclaimers stating that no pre-existing conditions are covered.
To be clear, short-term plans are not as good as the ACA-regulated policies that you can purchase during open enrollment. Short-term insurance is not regulated by the ACA, so it doesn’t have to follow the new rules:
The plans still have benefit maximums, they are not required to cover the ten essential benefits. (Most often, short-term plans don’t cover maternity, preventive care, or mental health/addiction treatment), they do not have to limit out-of-pocket maximums, and they do not cover pre-existing conditions. They also still use medical underwriting, so coverage is not guaranteed issue.
And the plans are not renewable. In most states, you have the option to apply for a new policy after the first one ends, but you’ll be going through the application process as a new enrollee, and any health conditions that developed while you were covered by the first policy would be considered pre-existing conditions under the second policy.
Although loss of existing minimum essential coverage is a qualifying event that triggers a special open enrollment period for ACA-compliant plans, short-term policies are not considered minimum essential coverage, so the loss of short-term coverage is not a qualifying event.
In addition, since short-term health insurance is not considered minimum essential coverage, you’ll still be on the hook for the ACA’s shared responsibility penalty if the total amount of time you’re uninsured or covered by a short-term plan is more than three months out of the year. (There’s a slight exception for 2014: People who enrolled in an ACA-compliant plan by March 31 – and thus have coverage effective May 1 – are exempt from the penalty even if they were uninsured or covered by a short-term plan for the first four months of the year.)
Although short-term plans do not provide the level of coverage or consumer protections that the new ACA-compliant plans offer, obtaining a short-term policy is better than remaining uninsured. And given the very limited range of options available outside of open enrollment, a short-term policy may be your best choice for the rest of 2014 if you didn’t purchase a new plan during open enrollment.