Outside of the individual market’s annual open enrollment period (November 1, 2015 to January 31, 2016 for 2016 policies – but the dates could be different for 2017) a short-term health insurance policy will likely be the best choice for most applicants who are shopping for coverage without a qualifying event. There are very few other options, and short-term plans generally provide the most comprehensive coverage available outside of open enrollment.
Short-term policies have been around for a long time, and have traditionally been a good option for people who are between jobs or waiting for a new employer’s coverage to become effective. Unlike regular individual major medical plans, short-term health insurance policies are not regulated by the Affordable Care Act and their sale is not limited to open enrollment windows.
So while they are still a good option for people who need coverage for just a few months before another policy begins, they are also available for consumers who might prefer a traditional major medical plan but missed open enrollment. Since we’re still in the early years of ACA implementation, there has been considerable confusion about the fact that individual major medical plans are not be available outside of open enrollment, even off-exchange.
Hope for the temporarily uninsured
Obamacare has made it much easier for a lot of the previously uninsured population – including those who are temporarily uninsured – to obtain high-quality individual health insurance, in many cases with considerable financial assistance in the form of cost-sharing subsidies and premium subsidies. But there are still situations when a short-term policy makes a lot of sense.
If you experience a qualifying event that triggers a special enrollment period, you’ll need to apply for an ACA-compliant policy (on or off-exchange) during your special open enrollment period, which lasts for 60 days in most cases. If you opt for a short-term policy instead, you won’t have the option to switch to an ACA-compliant plan after your open enrollment period ends. But if you miss open enrollment and find yourself shopping for coverage later in the year without a qualifying event, a short-term policy will provide you with up to six months of coverage in most states.
A short list of pluses
With short-term policies, healthy applicants can secure immediate individual and family coverage, with plans that can kick in as early as the next day. If you already know the number of days you will need to be covered, your insurer may allow you to make a single payment for the whole coverage period.
Short-term plans are typically offered with a selection of premiums, deductibles and benefit maximums. The policies are considerably less expensive than ACA-compliant major medical plans, so you may find that you can afford to purchase a plan with a low deductible and a high-benefit maximum.
The policies also cover a range of physician services, surgery, outpatient and inpatient care. In addition, policy holders can often choose their own doctor and hospital without restrictions, though there may be financial incentives for using in-network providers.
So if you’re healthy and in need of temporary coverage until another plan kicks in, or if you missed the last open enrollment and need coverage just for the rest of the year, a short-term major medical plan may be right for you (in that case, be sure you also enroll in a regular once open enrollment begins, so that you’ll have ACA-compliant coverage effective January 1).
What short-term health insurance won’t cover
Short-term major medical plans may be a great fit for healthy folks who just need temporary coverage, but the plans weren’t designed to cover everything, and they do not provide coverage for all of the ACA’s essential benefits.
They typically won’t cover your routine office visits, maternity, mental health or preventative care – and they won’t cover preexisting conditions. They also still use medical underwriting, which means that applicants with serious pre-existing conditions may not be able to get short-term coverage. Be sure to check the list of exclusions on any policy.
Short-term major medical may not be available in all 50 states.
As always, no matter what type of insurance you choose, be a responsible consumer. Research the coverage available in your state to make sure you understand what you are purchasing and closely review the benefits and limitations of each plan.