Is Short-Term Health Insurance Legit? A Comprehensive Analysis

Short-term health insurance is an alternative to traditional plans. These plans lack comprehensive benefits, such as preventive or maternity care, as they are not regulated by Obamacare.

While their monthly premiums are lower, you may end up paying out of pocket for medical expenses when you get sick.

These plans serve as a temporary bridge until individuals or families can enroll in a regular health plan. They are often sought by those between jobs or waiting for Medicare coverage.

Short-term health plans meet the minimum essential coverage under the Affordable Care Act. However, since 2019, the individual mandate has been lifted, so there’s no penalty for those enrolled in short-term plans.

As short-term plans operate outside the regulations of the ACA, insurers are not obligated to include the "essential health benefits" mandated by law for ACA-compliant plans.
As short-term plans operate outside the regulations of the ACA, insurers are not obligated to include the “essential health benefits” mandated by law for ACA-compliant plans: Photo source (Healthline)

What is short-term health insurance?

In case you lack health insurance provided by your employer, you have the option to purchase a health plan through the marketplace.

Marketplace plans are available for purchase exclusively during the Open Enrollment period or a Special Enrollment period triggered by a qualifying life event.

If immediate insurance coverage is essential, you may explore the possibility of acquiring a short-term health insurance plan.

Typically, these plans come with lower costs compared to conventional insurance, as they offer coverage for a more limited range of medical services.

Short-term health insurance and the Affordable Care Act

Short-term plans operate outside the regulations set forth by the Affordable Care Act (ACA), also known as Obamacare.

The ACA, a healthcare law aimed at enhancing affordability and providing additional benefits and protections, established a marketplace for individuals to independently purchase health insurance.

This option was particularly beneficial for those without employer-sponsored health insurance.

Short-term medical plans, however, are not covered under the Affordable Care Act, and therefore are not subject to its rules and standards. This means certain features do not apply.

Essential health benefits

Short-term health insurance is not required to cover the 10 essential health benefits, including prescription drugs, pediatric services, and hospitalization that all ACA plans must provide.

Pre-existing conditions

Coverage denial or increased charges based on pre-existing conditions are prohibited by health insurance providers.

Nevertheless, short-term plans may consider these conditions, potentially making it more challenging or costly for individuals to secure coverage.

For further information on pre-existing conditions, explore additional details.

Tax penalty

Short-term health plans fail to fulfill the minimum essential coverage (MEC) criteria for health insurance.

Previously, individuals enrolled in such plans were subject to a tax penalty.

However, the individual mandate has been lifted, eliminating the penalty for not having health insurance in 2019.

How long can you keep short-term health insurance?

Short-term plans operate within defined blocks of time, ranging from one month to slightly under a year.

Occasionally, these plans are labeled as “term health insurance.” Upon the conclusion of a short-term plan, you have the option to reapply for coverage multiple times, with the condition that the cumulative duration of your term coverage does not surpass 36 months.

What do short-term health plans cover?

Short-term coverage comes with varying health benefits depending on the plan and provider you choose.

It’s important to note that prescription drug coverage, preventive care, and maternity care may not be included in your plan. Additionally, short-term plans often have limited coverage for mental health services.

On the positive side, short-term medical insurance provides increased flexibility for seeing doctors outside your network.

Moreover, you typically don’t require a referral to consult with a specialist physician, offering greater convenience.

Read more: Is Health Insurance Allianz Legit?

How much is short-term health insurance?

Short-term plans typically have a lower deductible and premiums than traditional health insurance plans bought on the marketplace. This is because term health insurance often does not provide all the same medical benefits and services.

(Work-sponsored health plans will always be the more affordable option with lower monthly premiums.)

Should I get short-term health insurance?

If it’s not Open Enrollment or you can’t get Special Enrollment, short-term health insurance could work. It’s temporary and good for transitions, like waiting for Medicare or starting a new job.

But if you need regular medical care for chronic conditions, it might not cover enough. Pre-existing conditions might disqualify you or limit coverage.

Short-term plans are cheaper but don’t have typical benefits. They’re mainly for major medical events, so check what’s covered before getting one.

Leave a Comment