Health reform and short-term health insurance
In January, 2014, people with pre-existing medical conditions won’t be able to have their applications for health insurance declined. But, what do you do between now and then if you’re uninsured and unable to qualify for a private plan?
Short-term health insurance can be an excellent, affordable coverage option for people who have a temporary gap in coverage and know they’ll have access to renewable health insurance within six to twelve months. And, older people who find themselves uninsured and a year away from Medicare eligibility often find it easier to qualify for short-term coverage than major medical coverage.
What folks may not know is that when the Supreme Court upheld the Affordable Care Act (ACA), short-term insurance plans became a more viable option for younger, healthier Americans.
- Renewability is no longer an issue: Traditionally, the biggest downside to buying a short-term health insurance plan was that they were not guaranteed to be renewable. People who developed a pre-existing medical condition while on a short-term plan could re-apply for coverage, but in most states, the carrier could reject them because of the condition. But, beginning January 1, 2014 a person applying for major medical health insurance cannot have their application for coverage declined based on a pre-existing condition. So, if a short-term plan won’t renew you in 2014, look to a major medical plan.
- Saving money can be good: Short-term health insurance is typically very inexpensive in comparison to other types of health insurance. According to eHealth’s recent report, The Cost & Benefits of Short-Term Individual and Family Health Insurance Plans, the average plan cost $67 per month in 2011. And, the average deductible was $1,821 (source).
- Access can be easier: Until 2014, short-term policies will likely be easier to qualify for than major medical insurance for some people, because short-term policies can exclude coverage for any pre-existing condition. So, for example, if you had a back injury five years ago, your application for an individual major medical policy could be declined today, even if your back has not bothered you in four-and-a-half years. But, with a short-term plan you and the insurer can agree to exclude coverage for your back and you’ll still get coverage for anything not related to your back that happens while on the short-term plan.
- Be aware of skimpier benefits: One downside to short-term health insurance is that plans are not nearly as comprehensive as major medical insurance. So, if you can afford major medical and qualify for it, most experts will advise you to go that route. But, limited benefits make short-term plans more affordable and accessible. And, as long as you know what you’re buying, they can be a great option.
To learn more about short-term health insurance policies, click here.