What Is Short-Term Insurance and How Does It Work?
Published on April 17, 2015
If you want to understand short-term health insurance, a great place to start is with our new eBook, 3 Steps to Understanding Short-Term Health Insurance.
Short-term insurance is health coverage typically available for periods from 30 days to 90 days. In some instances with some insurers, short-term medical is available up to 12 months. These plans can give you some protection for limited periods while you are between standard health insurance coverage, also known as major medical insurance.
Short-term plans generally have lower premium prices than major medical plans. But, short-term plans usually offer more limited coverage than major medical.
What short-term plans cover
Short-term plans often do cover:
- Unexpected illness and injury
- Inpatient and outpatient hospital services
- Emergency room visits
Short-term coverage may also include discounts for using doctors and facilities within a preferred network.
You generally are responsible for paying a deductible and coinsurance and are likely to be subject to a lifetime coverage limit.
The exact coverage and benefits offered by a short-term plan depend on the particular policy and insurance company you choose.
What short-term plans don’t cover
Short-term health plans typically don’t cover pre-existing conditions, preventive care, pregnancy and maternity, immunizations, dental appointments, vision care, foot care, and certain other services.
You should always consult your specific plan details to see what medical conditions and treatments are covered or excluded.
When short-term plans can be appropriate
Short-term policies are not intended as permanent health insurance coverage, nor do they comply with the Affordable Care Act (see below).
Short-term plans may be suitable if you:
- Missed open enrollment for the year, and don’t qualify for a special enrollment period
- Lost your job or got laid off
- Need quick proof of insurance for a special activity or trip
- Are waiting for your Medicare coverage to begin.
You can purchase short-term insurance for periods ranging from 30 days through 12 months.
Short-term plans are not guaranteed-issue; you will have to answer a medical questionnaire about your health status and history and your coverage will depend on your answers.
Again, short-term plans are usually not suited to people with pre-existing conditions, as those aren’t covered.
Is short-term health insurance the same as Obamacare?
Short-term policies don’t satisfy the requirements for minimum essential coverage under the Affordable Care Act (ACA), also known as Obamacare.
The Obamacare major medical plans do offer minimum essential coverage, which includes (but isn’t limited to) preventive care, outpatient care, pregnancy and maternity, mental health, and prescription drugs.
Because short-term plans don’t offer this coverage, you won’t meet the requirements of the Affordable Care Act; this means you may have to pay a tax penalty.
Supplementing short-term insurance coverage
If you are concerned that short-term insurance doesn’t offer you enough coverage, you can purchase additional catastrophic insurance plans to supplement your short-term policy.
For example, accident insurance can offer coverage in case of certain accidents and injuries, and critical-illness insurance can provide you with a lump sum of cash in the event you are diagnosed with certain serious illnesses. And fixed-benefit indemnity medical insurance can give you a cash payout in case of covered medical needs.
Cash payouts from catastrophic insurance plans can give you a way to pay medical bills and replace lost income in case you experience a covered claim.
As you can see, there are many options for health insurance coverage to give you and your family peace of mind. Start exploring our short-term insurance plans now.