Do You Need Short-Term Medical Insurance?

Temporary life situations sometimes require short-term medical insurance. You might be between jobs, a recent college graduate, newly divorced, or retired but not eligible for Medicare. Maybe you missed open enrollment for the Affordable Care Act (ACA) or you cannot afford ACA coverage because you do not qualify for subsidies.

A short-term medical insurance policy can help you bridge the gap between group or other health insurance on the one hand and Medicare or group health at your new job on the other.

What are the pros and cons?

Short-term health plans often take effect within 24 hours of application and premium payment. If you drop a short-term plan, it may impose no penalties and may refund the unused premium. Premiums may be lower than for ACA plans, and short-term plans may offer more doctor and hospital options.

However, if you have preexisting conditions, short-term plans either will not accept you or will accept you but exclude those preexisting conditions. Maternity care, preventive and mental health care, prescription drugs, and substance abuse are benefits that short-term plans may not cover. Additionally, you usually cannot renew your short-term policy but instead must buy a new one.

While it is easy to apply for short-term plans online, the plans vary widely. A licensed health insurance agent can help find the best plan for you, at no additional cost.

What changes are coming?

Previously, rules limited short-term medical insurance to three months. As of October 2018, new rules allow insurers to offer short-term policies of up to 364 days, and you can renew the same plan for up to three years.

However, in many cases, the individual mandate penalty (the fine paid if U.S. citizens don’t maintain health coverage that meets minimum standards) continues to apply until 2019 because these plans do not meet ACA minimal essential coverage.

Still, short-term medical coverage may be just what you need to fill a short-term gap in health coverage. Contact your health insurance agent for more information.