If you find yourself without a major medical insurance plan outside of the open enrollment period, don’t despair. Short-term health insurance could provide the gap coverage you need.
Whether you are young or old, healthy or prone to illness, employed or unemployed, you should have health insurance coverage. Health insurance protects not just your health, but your wallet.
Short term health insurance plans were limited to a 90-day period in 2017, but a year later new rules were finalized extending short term health insurance plans up to 12 months (in some states) with the option to renew coverage up to 3 years. So in 2019, enrollees will have the option to be on a short term plan for a significantly longer amount of time.
But, your options vary by state.
About short-term health insurance
Short-term health insurance plans are available through a variety of different insurance companies. Sometimes referred to as “gap coverage,” these plans offer less coverage than routine major medical insurance. But, they can be useful in the case of a catastrophic incident, or as a supplement to your regular health plan.
And, since short-term health plans can be issued quickly, they may satisfy the requirement to have proof of medical coverage for any special activities or hobbies you might pursue.
Most short-term plans are designed as a temporary fix while you’re waiting for major medical insurance coverage to begin. Common reasons for a delay in major medical coverage could include:
- Missing the Obamacare open enrollment deadline and needing to wait for the next enrollment period
- Beginning a new job and waiting for employer coverage to start
- Waiting for Medicare eligibility to begin
- Needing fast proof of insurance information for a particular activity
- Undergoing a brief period of unemployment
- Being on strike, laid off, or out of seasonal work
Because these are generally brief issues, short-term plans typically last between 30 days and 12 months; the length of time depends on the insurance company and the short-term plan you choose. Some short-term plans can be renewed, but the maximum length is 12 months.
Short-term insurance advantages and disadvantages
There are a number of benefits to short-term health insurance:
- You pay low premiums, especially in comparison with major medical plans.
- You can sometimes be approved for coverage on the spot.
- You often have the benefit of flexible policy length.
- You don’t have to worry about having no health insurance.
However, short-term insurance does have some limitations:
- You will pay a tax penalty under the Affordable Care Act, because short-term insurance is not considered minimum essential coverage.
- Your plan only covers certain events determined by the insurance company’s plan details.
- Your pre-existing conditions are not covered, including chronic conditions such as diabetes and high blood pressure.
- You won’t receive coverage for preventive care such as vaccines and yearly exams.
- Your choices of physicians and medical care locations are limited.
- You are subject to medical underwriting, which means your current health will be evaluated and assessed for risks that could increase your premiums and affect your coverage. So, the short-term plan isn’t guaranteed-issue.
- You are responsible for out-of-pocket costs.
More about short-term insurance
Under the Affordable Care Act’s requirements and given the high cost of medical services, you need to have major medical coverage. However, when this isn’t possible, a short-term health insurance plan can be an excellent back-up solution.
Get more information on our Short-Term Health Insurance page.