Affordable Care Act
Understanding Short-Term, or Temporary, Health Insurance
Updated on November 14, 2019
If you want to understand short-term health insurance and how it works, a great place to start is with our new eBook, 3 Steps to Understanding Health Insurance.
Short-term health insurance plans are designed to provide affordable, temporary health insurance. They do not meet the coverage requirements of the Affordable Care Act (ACA or “Obamacare”), which means they don’t protect you from the uninsured tax penalty in 2018. In 2019, the individual mandate will no longer apply in most states, so those who do not have healthcare that meets ACA coverage requirements will not be facing fines for that reason. Keep in mind that the insured tax penalty at the state level may still apply depending on where you live.
As the above data shows, short-term health insurance plans are affordable, and may provide quality health coverage for consumers who are waiting for coverage under an employer-based group health insurance plan to begin, or who are waiting for the next Open Enrollment Period (OEP) to buy their own major medical individual or family health insurance plan.
Be aware that insurance companies do not have to approve your application for short-term health insurance. In most instances, insurers can decline an application for short-term health insurance if you have a pre-existing condition.
The definition of pre-existing conditions varies by plan and company. In some instances, conditions that you do not know you have at the time of application could be considered a pre-existing condition that limits your coverage.