Short-term Insurance

Everything to Know About Short Term Health Insurance

Updated on November 18, 2019

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Short term health insurance plans refer to a type of health coverage that has a limited duration. While short term plans do not cover the minimum required covered benefits by the Affordable Care Act (ACA), they have some advantages that make them appealing to some.
Please note that short term plans are not the same as catastrophic health insurance plans. Catastrophic plans, which are also called high-deductible plans, have low premiums and high deductibles as well as high out-of-pocket costs but provide the same coverage as a health insurance plan.
Previously, short term plans only lasted three months, could only be renewed up to a year. Now, under the Trump Administration, short term plans are available to most Americans and last up to a year with the possibility of being renewed for two more years. Although federal laws for short term plans have limits of up to a year, with the chance to renew, your state may have different limitations or may not allow short term health insurance at all.
You can use eHealth to check the plan specifics for short term health insurance plans in your area.

How do short term health insurance plans work?

Unlike ACA plans, there is no open enrollment period for short term health insurance plans. You can enroll any time of the year when you need short term coverage.
Short term plans provide coverage quickly, with most applicants getting approved within 1-14 days, according to eHealth. The earliest short term coverage can take effect is the day after applying; depending on what your situation is you may want to choose a later effective date. Some details to keep in mind about short term plans:

  • If you are looking for coverage for not only yourself but your spouse or family, you can get dependents covered under short term health insurance.
  • Short term health insurance is medically underwritten (meaning the insurance provider looks into your health history), so you and all dependents will need to meet the medical requirements of the plan to get covered. You can renew short term health insurance two times (which could bring your total short term coverage limit for up to three years, if your state follows federal regulations), but whatever you’ve received treatment for under a preceding plan will be considered as a preexisting condition. You can also cancel your plan at any time without penalty.While you can get a federal subsidy to help afford ACA-compliant insurance, you will not be able to receive a subsidy to help pay for a short term plan, since short term plans are not ACA compliant.If you feel that you need more coverage, short term health insurance plans can be combined with other supplemental insurance plans – such as dental, vision, accident, and critical illness – to help round out your coverage.

Which states offer short term plans?

Due to controversy about short term insurance’s slim benefits, most states have their own laws about this kind of coverage. Some states simply set stricter limits for how long a person can be enrolled in a short term plan; this insures that people are using short term plans as temporary solutions, rather than depend upon it as their health insurance for years. Other states have banned short term plans altogether.
No plans are sold in these states:

  • California
  • New York
  • New Jersey
  • Rhode Island
  • Massachusetts

What does short term health insurance cover?

Short term plans are usually low-cost and low-coverage plans. Since short term coverage is limited in what it covers and how it covers, the plans are often less expensive than ACA-compliant plans. This is largely because ACA plans are required to offer 10 essential benefits, but short term plans do not have a standardized list of benefits must be covered.
The ACA requires qualifying health insurance plans to cover 10 essential benefits:

  • Ambulance services
  • Emergency services
  • Preventative care visits
  • Hospitalization
  • Laboratory services
  • Maternity and newborn care
  • Mental health and substance use disorder services
  • Rehabilitation services
  • Pediatric services (including oral and vision)
  • Prescription drugs

When it comes to short-term plans, covered benefits will differ from plan to plan, but it’s very likely that a short term plan will cover healthcare costs related to emergencies.

Source: eHealth Insurance 
Short-term plans vary greatly, so you may be able to find a plan that will cover prescription drugs while others do not.
Additionally, you can be denied coverage if you apply for a short term plan. Unlike ACA plans, which cannot consider preexisting conditions for enrollees, short term plans can deny you coverage based on your health.
While you may be rejected if you have a pre-existing condition, you also might find that you’re required to pay more for your plan due to pre-existing conditions, or that costs related to your pre-existing conditions are not covered.
There also may be a cap on how much the plan will cover you annually or in your lifetime. For instance if the plan covers hospitalizations, but only up to $5,000 you will have to pay for the rest of the services you get in the hospital.

How much does a short term health insurance plan cost?

Short term health insurance tends to be cheaper than regular health insurance plans, like ACA or major medical coverage. According to eHealth, short term health insurance plans tend to be 80 percent cheaper on average.
For instance, a 40-year-old female would pay a $50 monthly premium for short term coverage in comparison to $253 per month for the lowest priced bronze plan. A family of 3 would pay $116 a month for short term coverage verses $862 a month for the lowest priced bronze plan.
The cost of a short term plan for both the 40-year-old female and family of 3 is around 1-2% of the median income.

Is short term health insurance right for me?

Short term health insurance is a great option for those who…

  • Are looking to fill gaps in coverage
  • Are waiting for coverage to kick in
  • Missed the ACA open enrollment period

Get a quote now by visiting eHealth and entering your zip code. eHealth carries over 1,600 short term health insurance plans from over 16 carriers. If short term health insurance is right for you, start shopping with eHealth right now.

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