Traditional health insurance policies offer comprehensive coverage, including preventive care, physical exams, immunizations, and sometimes even dental or vision care. However, short-term plans only provide “catastrophic” coverage, that is, in cases of emergency. These plans are effective for those who want health care coverage just for emergencies, but don’t want to give up other benefits for a lower premium. Basically, short-term policies provide temporary health care coverage, usually between 30 days and 12 months, and are often more affordable than traditional plans.
Short-term plans may be suitable if you:
- recently graduated from college
- You are a young adult who is no longer covered under your parent’s health insurance plan
- Retired earlier than planned
- You are waiting for another plan to kick in, such as when you start a new job
- Are unemployed or changing jobs and do not want to apply for Medicaid
- You have been laid off, have been laid off, or only work seasonally
- You don’t want to wait until the next general and open enrollment period to get health coverage (when there are no restrictions)
Regardless of your reasons for purchasing a short-term policy, these plans are not a substitute for permanent coverage. Research on this topic suggests that people who apply for short-term policies increased more than 100% in 2014. People who did not enroll during the general and open enrollment period are the ones who purchased the majority of these plans. These people now have to wait until the next enrollment period as they need some health insurance plan to bridge the gap and comply with the law.
Short-term plans are generally cheaper; but …
Many people choose to purchase a short-term plan for financial reasons. Like traditional plans, these short-term plans generally offer access to networks of medical providers, but going to providers outside these networks may cost you more. However, with traditional health care plans, your insurance company takes care of all the expenses on your billing. Plus, the insurance company and your doctor may even be able to lower your costs.
Since traditional plans have higher monthly fees; many people prefer to purchase short-term plans. But the reason long-term insurance plans cost more is because they offer more benefits. Under the guidelines established by law, bronze, silver, gold and platinum plans must cover an average of at least 60% of medical expenses. These plans also limit your out-of-pocket costs, or the amount you have to pay beyond coverage. In 2014, these limits were $6,350 for individual plans and $12,700 for family plans. Also, these plans may not limit the dollar amount of your annual benefits or your lifetime benefits.
The following chart, produced by eHealth.com, the nation’s largest private health care insurance marketplace, compares the monthly premium costs of short-term and traditional plans:
When it comes to short-term plans, costs (deductibles and co-payments) can vary widely. According to a study by HealthPocket, a Sunnyvale, California-based company that evaluates and compares health insurance, for a 30-year-old Los Angeles man, a policy with a $5,000 short-term deductible would cost about $99 per month. month. Meanwhile, the least expensive bronze plan, with a $5,000 deductible and purchased through California’s state exchange, would cost the same 30-year-old $175 a month.
Unlike Obamacare plans, short-term insurance plans have no limits on their coverage. With a traditional plan, once you have met your deductible amount, your insurance company will pay for treatment and services. All plans that comply with Obamacare, whether sold on or off the market or already part of Medicaid and Medicare, offer at least ten essential medical benefits, regardless of cost, since they have no monetary limits.
Short-term plans do not provide subsidies or Obamacare tax breaks
Under an Obamacare plan, if you earn less than 400% of the federal poverty level (about $46,000 for a single person), you may qualify for a monthly subsidy from the government. A government study indicates that 87% of people who sign up through the Healthcare.gov website have received subsidies to help offset their health insurance costs. However, subsidies are not available for short-term plans. Obamacare plans can be purchased through the government exchange, while short-term plans are sold directly by insurance companies, through brokers, or on certain websites.
It should be noted that short-term insurance plans do not meet all the standards and benefits of Obamacare. This means that you and your family could face a penalty for not having insurance, even if you are enrolled in a short-term insurance plan! Those without health insurance coverage in 2015 – for more than three months – could face the following:
- An annual fee or penalty of $325 per adult and $162.50 per child (up to $975 for a family)
- Or, 2% of your household income greater than the limit on your tax return, whichever is greater. The maximum penalty is equal to the average premium of a health insurance plan at the bronze level.
- Also, you will have to pay one-twelfth of the total premium for each month during which a member of your family was without coverage or was not exempt.
Coverage of short-term plans varies widely
When you’re evaluating short-term health insurance plans, don’t assume coverage is guaranteed. Even if you were previously approved for short-term coverage, you will need to submit a new application each time the policy is renewed. Most insurance companies that sell short-term plans limit your coverage to six months. They also often limit the number of times the same coverage can be purchased.
Su historial médico puede causar que usted sea rechazado. Por ejemplo, las condiciones médicas pre-existentes no están cubiertas por los planes a corto plazo. A diferencia de un plan de Obamacare, la cobertura podría ser revocada o el pago podría ser negado si usted trata de recibir tratamiento médico para una condición que no fue divulgada en el momento de adquirir su seguro. Además, si usted se enferma y necesita volver a solicitar cobertura bajo un nuevo plan a corto plazo, podría ser rechazado.
Otro problema se presenta al cambiar de una póliza a corto plazo a un plan tradicional de seguro Obamacare. Si usted quiere comprar, o si usted califica para, un plan tradicional, tendrá que esperar hasta el próximo período de inscripción general abierta. Esto significa que usted podría estar sujeto a períodos de no cobertura.
If you have a short-term plan, you should know that once your plan expires, you are not eligible to receive health benefits under the Consolidated Omnibus Budget Reconciliation Act (COBRA). In addition, purchasing a short-term insurance plan also means that you do not qualify under the protection of the Health Insurance Portability and Accountability Act (HIPAA), which guarantees individual health care coverage. .
The option of “catastrophic plans”
If you are 30 years of age or younger, you may be considering purchasing a “catastrophic” health insurance plan. These plans are much less expensive than Obamacare plans, and they meet the minimum essential standards for health coverage. You may also be able to purchase a catastrophic plan if your life situation prevents you from getting traditional insurance; this is known as a “hardship waiver.” These plans generally serve as a defense against worst-case scenarios, such as sudden illness or serious accidents.
Catastrophic plans typically pay all medical expenses up to the deductible amount. Once costs reach the level of the deductible amount, the catastrophic plan generally covers essential health benefit costs. Under the Affordable Care Act, catastrophic plans cover three primary care visits per year at no cost, even before you’ve met your deductible level. In addition, these plans cover preventive services for free.
While these plans have lower monthly premiums, you may need to access your benefits more often. In addition, they have very high costs that have to be paid out of pocket. Also, your income is not one of the factors that determines the cost of a catastrophic plan; you have to pay the standard premium price. Purchasing one of these plans through the marketplace also prevents you from receiving tax credits on your tax return. When you apply to the Marketplace, you’ll be notified of the plans and savings for which you qualify. If you qualify for a catastrophic plan, you will see these plans within your coverage options.