When shopping around for medical policies, you may come across short-term health plans. These policies are a type of health insurance designed to give you temporary protection when you do not have another policy in place. But is short-term health insurance good, and is it more cost-effective than standard health coverage? We break down these key questions in this comprehensive guide.
Defining What Short-Term Health Insurance Really Is
Short-term health coverage, also known as short-term, limited-duration insurance (STLDI), is a special type of plan designed to bridge a gap in your health coverage. It does not usually cover as much as a traditional plan, but it can help tide you over until you can get standard protection through the government healthcare marketplace or your employer.
How long can you use a short-term policy? After Sept. 1, 2024, the maximum length of these plans will be three months, with a potential one-month extension. Some states already have shorter limits in place, such as Delaware and Maryland.
How Does Short-Term Insurance Differ From Standard Policies?
These policies do not qualify as traditional health insurance plans, and they are not regulated by the Affordable Care Act. Instead, states set their own guidelines for these limited-term policies. As a result, several states don’t offer these plans at all, including:
- California
- Colorado
- Connecticut
- District of Columbia
- Hawaii
- Maine
- Massachusetts
- Minnesota
- New York
- New Hampshire
- New Jersey
- New Mexico
- Rhode Island
- Vermont
- Washington
If you do live in a state that offers limited-duration policies, you can expect some differences compared to standard insurance. For starters, you will need to contact a licensed broker or insurance agent to find temporary plans. From there, you can find policies with a wide range of deductibles, premiums, and co-pay costs, so you can secure an option that works with your budget.
The plans can cover different medical needs, including primary care visits, emergency care, hospitalizations, lab tests, and prescriptions. However, they are not required to meet the same minimum care standards as ACA plans, so covered procedures can vary significantly from policy to policy.
Weighing the Advantages: When Does It Make Sense?
There are several situations where you may want to consider a temporary medical plan. If you have a coverage gap for any reason but still want protection, a limited-term policy may be your main option to decrease your healthcare costs. Here are a few situations where you might not have a policy in place and decide to pursue a limited-duration plan:
- You missed open enrollment for marketplace plans.
- You don’t qualify for a health insurance subsidy or Medicaid, making standard insurance too expensive.
- You didn’t sign up for an ACA plan after losing your job and need assistance until you are able to secure an employer-sponsored plan.
Limited-duration policies can be an affordable option if you are young and healthy but still want some assistance with healthcare costs. It also has added benefits, such as the ability to access a wide network of doctors, because many private STLDI plans don’t adhere to provider networks. Plus, your plans can start right away, so you do not have to wait for a qualifying event or an open enrollment period.
The Flip Side: Potential Pitfalls and Disadvantages
What are the cons of short-term insurance? There are a few main drawbacks to keep in mind: eligibility, cost of short-term health insurance, and coverage.
For private plans, your eligibility can depend on a wide range of factors. While the ACA is required to provide coverage, even if you have preexisting conditions, many companies will deny you temporary protection if you have previous health issues. That means short-term options are mainly geared toward people who are young and healthy.
The cost of standard ACA plans can only use your age, location, smoking status, and type of plan to determine your insurance costs. Private limited-duration plans, however, can calculate your risk using a wide range of factors, including your health history. So, although STLDI is usually cheaper than traditional coverage, your costs may be higher if you have ongoing health needs.
Finally, you will also have limited coverage. There is no such thing as ACA-compliant short-term health insurance, so STDLI isn’t required to provide a minimum level of coverage like Obamacare plans. Many policies have exclusions for certain types of care that are covered under the ACA, including sleep disorders, allergy treatment, pregnancy care, and mental health treatment.
The Cost-Benefit Analysis of Short-Term Health Plans
One of the main advantages of limited-duration policies is the lower up-front cost. However, medical costs can be a balancing act. Because these policies cover less, that can mean bigger expenses down the line if you end up having serious healthcare needs.
Breaking Down Premiums, Deductibles, and Out-of-Pocket Limits
How much does short-term health insurance cost? There are a few key factors to consider, including your monthly premium, your deductible, your co-pays or co-insurance for different services, and your out-of-pocket limits.
Because of their coverage limits, limited-duration plans often have affordable premiums that are much lower than standard plans. You can also find no or low-deductible options because of the short duration of your policy. Just like standard ACA options, co-pays will vary depending on the amount of coverage you decide to purchase. If at any point you can’t afford your health insurance, even with low premiums, you can cancel a policy at any time.
Some short-term policies will have an out-of-pocket maximum, which is the highest you’d have to personally pay for healthcare during the policy period. However, it’s more common for private policies to have a lifetime maximum, which is a set amount the insurer will pay. Once you reach that cap, you’ll have to deal with all the remaining costs.
The Future Implications of Choosing Short-Term Coverage
It is important to note that limited-duration policies are a stop-gap solution designed to help you until you can get a traditional plan. That’s because STDLI is limited when it comes to coverage and can be costly and hard to find if you have complex medical needs. Not signing up for coverage when you get the chance could make it hard to get affordable treatment for your needs. However, it can be a helpful supplement to ensure you have insurance if you’re ever faced with a coverage gap.
Get Health Care Coverage From Freeway Today
If you do not have insurance, you need to act fast to ensure you have protection. In this situation, limited-duration coverage can come to the rescue. STLDI can be more affordable and accessible than other healthcare plans, especially if you are in a unique situation where you temporarily lose coverage. By exploring the pros and cons, you can determine whether STLDI is the right option for you while you try to find a permanent solution.
Regardless of the policy you need, you can connect with the Freeway Insurance team for guidance on your healthcare coverage. They will walk you through your options for both temporary protection and ACA plans, so you never have to go without. Visit a Freeway Insurance office near you, get an online quote, or call 800-777-5620 to get coverage today.
