Short Term vs Traditional Health Insurance

Short Term vs Traditional Health Insurance text overlaying image of a woman decidingPeople often find themselves at a crossroads when it comes to health insurance, trying to figure out which choices will best meet their specific needs. A short-term health insurance plan has fewer benefits than a major medical plan that meets all of the standards set by the Affordable Care Act (ACA). However, it is still more affordable. More than ever, people can choose from various health insurance plans. People who buy their own health insurance usually choose between short-term medical policies and individual/family policies that are in line with the Affordable Care Act. 

Traditional Health Insurance

A regular health insurance plan helps you pay for some of the costs of your care. It works with monthly fees, copayments (also known as “copays”), and coinsurance. You can either get a standard health insurance plan through your job or buy one on your own from an insurance company. In some situations, it is cheaper to buy health insurance through the Marketplace that was set up by the Affordable Care Act. You will have to pay your premium, which is the monthly cost of your health care plan, through a standard health insurance plan. 

 

There may also be a copay, which is a set amount each time you get medical care, like when you go to the doctor or an expert. You will have to pay a different amount for each service. In this case, your copay will probably be less when you go to the general practitioner than when you go to an expert or the emergency room. You might also have to pay coinsurance for some medical costs, like tests or stays in the hospital. In addition to the copayment for the procedure, the coinsurance is the part of the price that you have to pay. If you have an 80/20 split, for instance, the insurance company will pay 80% of the cost and you will have to pay the other 20%. After you’ve met any deductibles that your insurance policy sets, coinsurance kicks in.

Short Term Health Insurance

Short-term health insurance is a type of health plan that can cover your medical bills temporarily when you are switching health plans or if you need coverage in case of an emergency. The benefits you get from short-term health insurance plans and insurance companies varies a lot. The Affordable Care Act (ACA) does not force these kinds of plans to follow its rules. Plans under the ACA have to offer a certain amount of coverage, which is known as “minimum essential coverage.” Plans for short-term health care don’t have to follow the same rules.

 

Preventive care, doctor visits, urgent care, and emergency care are usually covered in some way by short-term medical insurance. Some plans may also cover medications. Others also let you save money by going to doctors who are in their network. Before you buy any plan, make sure you read the “exclusions and limitations” section. These details will show you what a certain plan covers and does not cover.

The Differences

Coverage Duration

  • Short Term Plans As the name suggests, short-term health insurance provides coverage for a limited duration, typically ranging from a few months to a year. It’s designed as a temporary solution, often serving as a bridge for individuals between jobs, recent graduates, or those waiting for open enrollment periods.
  • Traditional Health Plans – Traditional health insurance, on the other hand, offers comprehensive and long-term coverage. Policies are typically annual and can be renewed, providing continuous protection against a wide range of medical expenses.

Enrollment Flexibility

  • Short Term Plans – Short-term plans offer flexibility in enrollment, allowing individuals to purchase coverage at any time during the year. This flexibility can be beneficial for those experiencing life changes or gaps in employment.
  • Traditional Health Plans – Traditional health insurance operates within specific enrollment periods, often tied to open enrollment periods or qualifying life events. Missing these windows may limit access to coverage, emphasizing the need for timely enrollment.

Affordability

  • Short Term Plans – Short-term plans are often more affordable than traditional health insurance, making them an attractive option for budget-conscious individuals. However, lower premiums may come with trade-offs in terms of coverage breadth and benefits.
  • Traditional Health Plans – While traditional health insurance plans may have higher premiums, they typically offer comprehensive coverage, including essential health benefits mandated by the Affordable Care Act (ACA).

Coverage Limitations

  • Short Term Plans – Short-term plans may have limitations on coverage, excluding pre-existing conditions, preventive care, and certain essential health benefits. Policyholders should carefully review the terms and conditions to understand the scope of coverage.
  • Traditional Health Plans – Traditional plans, especially those compliant with the ACA, provide a more extensive range of coverage, including preventive services, maternity care, mental health services, and prescription drugs. Pre-existing conditions are covered, and there are no annual or lifetime benefit limits.

Risk

  • Short Term Plans – People who are willing to pay more out-of-pocket expenses in exchange for reduced monthly premiums could find this option to be suitable. It’s perfect for people who are not bothered by the fact that the coverage is only interim.
  • Traditional Health Plans – By selecting this option, you will receive comprehensive coverage, which gives a higher level of financial protection against unforeseen medical prices. Appropriate for people who have a high priority on receiving significant benefits and long-term security.

Legal Requirements

Short Term Plans

The federal government says that short-term health insurance plans can only last for 364 days at most. You can only repeat the plan three times in a row. This means that you can only have short-term health insurance for a little less than three years at most. However, those are only the government rules about short-term plans. There is no rule that says states have to offer these plans or give those amounts of time. In fact, short-term health insurance is against the law in some states. In other states, health insurance rules have become so strict lately that insurance companies don’t even bother to offer plans, even though the federal rules are still in effect. Check out our health insurance state by state pages to learn more about these rules and to see if your state offers short-term plans.

Traditional Health Plans

The ACA also sets rules for what kinds of medical care insurance plans must cover. The Affordable Care Act (ACA) says that most insurance plans must offer 10 essential benefits. Plans that are allowed by the ACA can’t charge more or refuse to cover someone because they already have a health problem. But taking away the limits on pre-existing illnesses caused a problem called adverse selection. At this point, more sick people sign up for health insurance to pay for their care, while healthy people don’t because they don’t think they need it right now and can buy a plan if their health gets worse. This can have a big effect on how much danger an insurance company is willing to take with their plans. 

 

The ACA set up an annual Open Enrollment Period (OEP) so that people wouldn’t be unfairly turned away from insurance. This is the only time people can buy or change insurance plans. If you want to sign up for health insurance after the Open Enrollment Period, you can only do so if you have a “qualifying life event,” like getting married, divorced, or having a child. 

How To Choose The Right Plan

Choosing the right plan can be difficult because there are so many different options available. To help you decide, here is a list of things to consider while searching.

 

  • How long you need coverage – Individuals seeking temporary coverage during a transitional period may find short-term health insurance suitable. Those requiring long-term, continuous coverage are better served by traditional health insurance.
  • Budget – Short-term health insurance may be a cost-effective option for those on a tight budget or facing temporary financial constraints. Traditional health insurance, while potentially more expensive, provides comprehensive coverage and may be a better fit for those prioritizing extensive benefits.
  • Health needs – Individuals with pre-existing conditions or specific healthcare needs may find traditional health insurance more suitable due to its legally guaranteed comprehensive coverage. Short-term plans may have limitations in these areas.

How EZ Can Help

Choosing between short-term health insurance and traditional health insurance is a decision influenced by individual circumstances, preferences, and health needs. Short-term plans offer flexibility and affordability. Making them suitable for specific situations, while traditional health insurance provides comprehensive coverage and long-term security. By carefully evaluating personal healthcare needs, budget considerations, and coverage requirements, individuals can make informed decisions that align with their unique circumstances, ensuring they have the right health coverage for their journey ahead.

 

EZ can help you with enrolling in health insurance, answering any questions you may have, or simply weighing your options. To offer you the finest coverage, our insurance agents work with the best providers in the country. They will compare all of your options at no cost! To begin, put your zip code in the box below for free fast quotations, or call us today at 877-670-3557.

About The Author:
Cassandra Love

With over a decade of helpful content experience Cassandra has dedicated her career to making sure people have access to relevant, easy to understand, and valuable information. After realizing a huge knowledge gap Cassandra spent years researching and working with health insurance companies to create accessible guides and articles to walk anyone through every aspect of the insurance process.

33 thoughts on “Short Term vs Traditional Health Insurance

  1. According to my personal knowledge ,I think the insurance might seem like just another bill to pay. But the cost is too high to not have it. And coverage is required under the Affordable Care Act, meaning you’ll have to pay a penalty if you don’t have it.
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