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Short Term Health Insurance

Starting in 2019, Americans had a new option for healthcare insurance: short term health insurance. Its primary purpose was to give people who couldn’t afford or access health insurance under The Affordable Care Act (ACA or, sometimes, “Obamacare”) temporary medical coverage in certain situations until they could access a traditional plan. Short term plans can last from 30 days to a year, with an option to renew for up to three years.

To understand if a short term health insurance plan is right for you and to get the most out of it, you should understand how it works, what it costs, and what it covers.

When to use

The ideal goal is to enroll in a traditional plan with comprehensive coverage and benefits through your employer or one you buy on your own through an individual insurance company or the Health Insurance Marketplace. But you might find yourself needing to fill a temporary gap in coverage. Individuals in the following circumstances might be suited for a short term health plan:

  • Missing open enrollment for a traditional health plan
  • Turning 26 and transitioning off of parents’ plan
  • Waiting for Affordable Care Act coverage to start
  • Needing coverage until Medicare kicks in
  • Being between jobs or waiting for benefits to begin at a new job

Benefits of short term plans include being able to cancel coverage whenever you want and without penalties, being able to pick from a variety of plans, and getting coverage fast—as soon as the day after submitting the application.

Coverage

Coverage—what an insurance plan pays for—varies between insurance companies and plans. Short term plans are not required to comply with the ACA guidelines of minimum essential coverage. However, some states regulate short term plans to comply with most or all ACA guidelines. In general, short term health insurance doesn’t cover pre-existing conditions or a medical issue you’ve previously been treated for.

A sampling of care not broadly covered include:

  • Prenatal and maternity care
  • Mental health and drug treatment
  • Prescription drugs
  • Injuries from organized sports
  • Joint replacement surgery
  • Hernia repair surgery
  • Treatment for injury incurred while intoxicated
  • Treatment for acne or moles
  • Immunizations

In addition to these limitations, plans may limit the amount of care they will pay per day or in a year. Traditional health plans, which follow ACA rules, can’t impose these limits.

What is covered includes preventive care, doctor visits, urgent care, and emergency care. There may be coverage for prescriptions. You’ll need to read the “exclusions and limitations” before buying a plan to learn exactly what’s covered.

Costs

Payment structures for short term plans are the same as those for traditional health insurance.

  • The premium is the monthly fee you pay for having coverage. The amount varies depending on the level of coverage, the deductible, and coinsurance.
  • A deductible is how much you pay out of pocket for services until you meet a certain amount. Once you pay that amount, your plan starts sharing costs. Short term deductibles are higher than traditional plans.
  • Coinsurance is the percentage of costs you share with your plan after you meet your deductible. Most short term plans have a deductible and coinsurance.
  • A copay is a fee you pay when you visit a doctor, usually payable at the time of the visit. Some short term plans require you to pay a copay for certain types of doctor visits.
  • Other out-of-pocket costs may be required if you need care not covered by the plan.

If you’re considering short term health care, shop carefully. Compare as many plans as possible and read all of the fine print so you know about holes in coverage. You may find it makes more sense to simply save money from each paycheck to pay for health costs until you can join a traditional plan.

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