Short-term health plans are designed to cover people who are between insurance plans and need temporary coverage. These plans typically have high deductibles and are designed as “just in case” coverage for catastrophic illness and accidents.
A slight majority (55.1%, as of the 2010 census1) of Americans have health insurance through work, which is often paid for in part by a person’s employer. When a person loses or leaves their job, the law requires that an employer allow the former employee to stay on the company’s health plan through COBRA. But, it does not require the employer to continue contributing toward the premium.
This means that former employees must now pay the full premium, which for many people is simply not an affordable option. Many will drop off the old plan and wait until they can get covered on a future employer’s health plan, which often takes several months.
This is where short-term health insurance can be helpful. These plans generally have higher deductibles and out-of-pocket costs and are designed to cover catastrophic events (such as major illness and accidents) rather than preventive care. Because the coverage is limited, short-term health plans typically cost less than traditional plans, and they can be an affordable option that provides peace of mind while a person is between jobs.
Some Important Considerations about Short-Term Plans
Short-term plans typically offer coverage from between 30 days and 12 months. They aren’t guaranteed issue under the new healthcare law, so it is possible to be denied for coverage because of preexisting conditions.
Short-term plans also lack some of the other protections under the new law, and they are non-renewable, meaning that an insurance company isn’t required to renew the plan. It’s also important to note that having a short-term health plan does not exempt a person from the individual shared responsibility payment for not having insurance in 2014.
Can I Get Short-Term Coverage through the ACA Marketplace?
While the health insurance exchanges established under Affordable Care Act (ACA) do offer catastrophic health insurance plans for people under age 30 and those with certain hardship exemptions, these plans are not intended to replace individual short-term health coverage for the majority of people. Some qualifying hardship exemptions that may qualify you for a catastrophic health plan if you’re over age 30 include:
- Being evicted in the past 6 months
- Being the victim of domestic violence
- Filing bankruptcy in the last 6 months
- Inability to afford a marketplace plan
If you are over age 30, talk to an insurance agent to learn about whether you qualify for a hardship exemption in order to purchase a catastrophic plan through the health insurance marketplace. Otherwise, an individual short-term health plan is a good option for those who need coverage between jobs. The certified insurance agents at BenefitPackages can help you understand your options and provide you with a quote.