If you need a health insurance plan outside of the Open Enrollment Period, or you need healthcare coverage in case of an emergency, short-term health insurance is a solution for temporary medical coverage. But in order to make the most of short-term health insurance, you should understand how it works, what it costs, and what it covers.
Jump To:
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Who Qualifies for Short-Term Health Insurance?
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What Does Short-Term Health Insurance Cover?
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The Difference Between Short-Term and Traditional Health Insurance
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The Cost
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How To Enroll
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Advantages and Disadvantages to Short-Term Health Insurance
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State Laws for Short Term Health Insurance
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FAQs
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Who Qualifies for Short-Term Health Insurance?
A short-term health insurance plan is best used to bridge a coverage gap while you search for a longer-term health insurance solution. Therefore, one of these plans might work for you if you find yourself without coverage for a short time in the following situations:
- You have a waiting period for traditional health insurance coverage
- You suddenly lost or quit a job
- You missed the Open Enrollment Period
- You don’t qualify for a Special Enrollment Period
- You don’t qualify for COBRA
- You’re a college student who needs coverage for the school term
- You recently aged out of your parent’s plan
You want to be aware of the requirements for short-term insurance before deciding whether it is the best option for you. You can search for an ACA-compliant plan if you are looking for coverage during the annual open enrollment period or have had a significant life event that might qualify you for a special enrollment period.
What Does Short-Term Health Insurance Cover?
Short-term health insurance often covers preventive care, doctor visits, urgent care, and emergency care to some extent. Some prescription drug coverage might also be available. Additionally, some short-term insurance plans may provide discounts for using in-network doctors and hospitals. Before purchasing any plan, be sure to read the “exclusions and limits” material. This will explain what a certain plan covers and does not cover.
Additionally, if your short-term plan does not cover something that you need, you can pair it with other supplemental insurance policies. Short term plans are often used alongside dental, vision, and critical illness plans to give you more comprehensive coverage.
The Difference Between Short-Term and Traditional Health Insurance
Short-term health insurance plans were created for those who face a brief gap in health insurance coverage. They are generally regarded as “major medical” coverage; however, short-term policies are distinguished from other comprehensive major medical policies because they only provide coverage for a limited term, typically less than a year.
This also means that a short-term plan is not supplemental health insurance. It is not designed to add benefits not otherwise covered in your primary health insurance as it is its own policy all together. And it differs from other health insurance plans that are considered “limited benefit” or “excepted benefit” policies, such as cancer-only policies or hospital indemnity policies that pay a fixed amount per inpatient stay.
Other notable restrictions on short-term insurance include the sorts of services covered, which are frequently subject to monetary limits. It is important to note that a short-term plan typically exclude or heavily limit coverage for mental health, substance abuse, and prescription pharmaceuticals.
The Cost
The price of short-term health insurance can vary greatly, but based on statistics from existing plans, they typically average around $124 per month. Premiums for short-term policies with higher deductibles might be lower. In addition, your state of residence and health at the time of application will affect the price.
Short-term plans frequently have very high deductibles, which makes them expensive in terms of out-of-pocket expenses. In general, the out-of-pocket expenses for short-term health insurance include:
- Premium – This is the monthly cost of your insurance. The cost of the premium will vary based on the amount of protection you select, the services that are covered, your plan’s deductible, and your plan’s coinsurance.
- Deductible – Short-term health plans may have deductibles that are much higher than those of other, more conventional health plans. You will pay out-of-pocket for services until you reach your deductible, and then your plan will begin sharing expenses.
- Coinsurance – After your deductible is met, your insurer will pay a percentage of your bills, and you will also pay a percentage, known as your coinsurance.
- Copay – You might have to pay a set fee when you see your doctor, or a copay, which is usually due at the time of the visit.
- Services that are not covered – You could have to bear all the cost of certain medical treatments with a short-term plan. For instance, some short-term plans might not cover, or might limit your coverage, for maternity care, mental health or substance abuse care, vision care, or dental care.
It’s important to note that short term plans do not qualify for any tax subsidies under the ACA. Although even without getting discounts these plans tend to still be cheaper than Marketplace plans.
How To Enroll
Short-term plans do not adhere to Affordable Care Act (ACA) regulations and are not offered through the Health Insurance Marketplace. Some private insurance companies, though not all, offer short-term health plans, so you’ll need to look into insurers that offer them. Before you buy or enroll, make sure to carefully read up on each policy, since these policies can differ significantly from plan to plan.
Advantages and Disadvantages to Short-Term Health Insurance
As with all insurance, there are pros and cons of short-term health plans. Weighing them will be helpful if you’re unsure if this type of plan is right for you.
These plans can be beneficial because:
- They fill temporary gaps in coverage
- There are multiple plan designs available
- You can get coverage at any time
- You can cancel coverage any time without a penalty
- Monthly premiums for short-term plans are often cheaper than those for traditional healthcare plans
These plans have drawbacks, as well, including:
- They typically have significantly higher deductibles than do traditional health plans.
- Short term plans do not have to offer the same coverage as traditional plans because they do not have to follow Affordable Care Act (ACA) guidelines. This means that they can deny coverage for pre-existing conditions and limit coverage on most health services.
- The costs for plans and services can vary with almost no government oversight.
- Only those in good health are able to acquire plans that are medically underwritten.
- If you purchase a short-term policy in an effort to lower your monthly premiums, you run the risk of having unpaid medical expenses later on.
State Laws for Short Term Health Insurance
According to federal law, short-term health insurance policies can only be in effect for a maximum of 364 days. And you can only renew the plan a maximum of three times. This means that you can only have a short-term health insurance policy for a maximum of a little under three years.
But those are just the federal laws surrounding short-term plans. States are not required to allow those amounts of time, nor are they required to offer these plans at all. In fact, some states have even made short-term health insurance illegal.
In other states there are restrictive guidelines on health insurance, so insurers don’t bother offering these plans, even though the federal guidelines are still on the books. For more information on these guidelines and if your state offers short term plans check out our health insurance state by state pages.
To see health insurance costs and information specific to your state click here!
FAQs
When does coverage start?
Short term insurance plans usually start covering you within 1 to 14 days of enrollment.
Can I buy a plan year round?
Yes, one of the many reasons short-term plans are beneficial is that you can get a plan even if you miss the annual Open Enrollment Period.
Can I be denied due to pre-existing conditions?
Yes, unfortunately the ACA does not regulate short-term plans, so private insurance companies can choose to deny coverage.
Is there coverage for maternity care?
Most short-term plans will not cover maternity care, but there are some plans that do. It depends on your state laws and the individual insurer you choose.
Is there prescription medication coverage?
Many plans will cover medication for inpatient hospital care, but will most likely not cover retail prescriptions.
Are hospital and doctor visits covered?
Short-term plans will typically cover hospital and doctor visits. The only exception is care for pre-existing conditions or other various exclusions, depending on the plan.
What if I need more or less coverage than I originally signed up for?
You can cancel your short term plan at any time without a penalty. If you need coverage for longer than, depending on your state, you may be able to renew your plan to extend coverage. Some states will allow you to buy additional plans after your initial one has ended even if they don’t let you renew. However, whatever you were treated for under a prior plan can be regarded as a preexisting condition for any later plans.
The Bottom Line
When you have a gap in your major medical insurance or if you’ve missed the OEP, short term health insurance is a great safety net. These plans provide coverage for as long as a year and are often renewable for up to almost three years.
These plans also keep you covered so you never get caught in a medical crisis without insurance. Reviewing your state’s guidelines and coverage options thoroughly is always a good idea, though, because the amount of services covered and the time frame for availability vary by plan and state.
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