What is short term health insurance, exactly? And what does it cover?
A short term health plan – also often referred to as “short term medical insurance” and “temporary” health insurance – provides limited, temporary benefits.
Many people use these types of plans instead of going uninsured when they’re between Affordable Care Act (ACA)-qualifying plans, such as when between jobs. They can be an attractive option for some because they have flexible durations (as short as 30 days) and tend to have lower premiums because of the limited nature of the benefits and coverage.
Despite the features, there are some serious potential drawbacks. In the remainder of this article, we’ll discuss:
- Short term health plans vs. ACA plans
- What short term health plans typically cover
- How much you might pay for a short term policy
Short Term Health Insurance vs. ACA Plans
We briefly mentioned a couple of the potential features of short term plans above, but it’s very important to understand exactly what you’re getting with a short term plan to determine if it’s right for you.
First, is temporary health insurance the same thing as an ACA health plan (aka “Obamacare”)? No.
Short term health insurance and ACA plans are quite different and short term plans do not qualify as minimum essential coverage under the ACA.
Some key differences between ACA-qualifying coverage and short term medical plans:
ACA plans provide comprehensive benefits coverage with the 10 essential health benefits (e.g., preventive care and hospitalization). Short term medical is “limited benefit” coverage. These plans typically provide emergency and some hospitalization benefits for unexpected accidents or illnesses but are not intended to cover the broader spectrum of healthcare like preventive care, maternity care or prescription drugs. (More on what short term plans may cover, below).
ACA plans are guaranteed-issue and cover pre existing conditions as required by law (including pregnancy). Short term health plan availability is at least partly based on your health status (some people won’t qualify to enroll) and plans are not required to cover pre existing conditions.
There are no annual or lifetime benefits limits for ACA plans for essential health benefits. Short term plans do have an annual benefits caps.
When you can enroll – Individual ACA-qualifying plans are only available during the annual open enrollment period or if you qualify for a special enrollment period. Short term plans may be available year-round to those who qualify subject to state availability.
Duration – Individual ACA plans typically have one-year terms. This means that your policy benefits and premium won’t change during that time. After a year (or during the annual open enrollment period, whichever comes first), you’ll have the option to choose a new plan or be re-enrolled in your existing plan, which may have a different premium, deductible, or benefits for the coming year.
Short term plans are available typically for 30 to 364 days depending on your state. For both types of coverage, you can cancel at any time.
Plan availability (by state) – ACA-qualifying health plans are available in all 50 states and D.C. Short term plans are subject to state laws and are not available in all states.
Deductible Costs – Both types of plans have deductibles which may be high. Factors like the plan type (the ACA metal levels) and managed care type (HMO, PPO, etc.) can influence deductible costs.
Premiums may be lower for a short term health policy than an unsubsidized ACA plan. This is typically because short term plans cover fewer healthcare services than ACA plans, can deny coverage, and have more exclusions and limitations (more on costs below).
For those that qualify, subsidies are available from the ACA Marketplace. There are no subsidies for short term health plans.
What Do Short Term Health Insurance Plans Cover?
You already know that short term medical and major medical insurance are different. Short term plans are not subject to the Affordable Care Act (ACA), so they won’t include the essential health benefits.
Even so, temporary medical plans do include a range of benefits that may provide some help for unexpected medical bills that result from a range of medical events like heart attack or stroke, a fractured bone, or a doctor’s office visit due to illness.
Without any health benefits, you may find yourself paying 100% out of pocket for anything from a broken leg to an emergency appendectomy.
Short term benefits vary by plan and are still subject to deductible, copay, and coinsurance. Covered services often include things like:
- Hospital room, board and general nursing care
- Intensive or specialized care
- Emergency room treatment
- Inpatient doctor visits
- Ambulance, ground or air services
- Doctor office visits
- Outpatient hospital surgery or ambulatory surgical center
- Surgical services
- Administration of anesthetics
To understand what the short term plan you’re considering covers (or doesn’t), read through plan materials and pay special attention to sections that discuss covered expenses, networks, pre-existing conditions, pre-certification and policy exclusions. Be sure to contact the carrier with specific questions.
Let’s look at a few more specific coverage questions and provide some general answers…
Do short term health plans cover pre existing conditions?
Pre existing conditions are typically excluded from short term health plans. However, short term products are evolving all the time as the health insurance market changes and some carriers are starting to offer limited pre existing conditions coverage with their short term policies.
Is pregnancy covered under short term medical policies?
As with most pre existing conditions, pregnancy is not something short term plans typically cover. You may want to see if you can buy an ACA plan to obtain benefits that cover pregnancy, childbirth and postnatal care. Learn more about special enrollment periods and how to qualify.
Are prescription drugs covered by temporary plans?
Short term plans don’t typically include benefits for outpatient prescription drugs – but again, plans are evolving all the time. If you take prescribed medications, it’s worth checking to see if short term plans include coverage.
Do short term plans cover preventive care?
Typically, no, though some short term policies may include a few limited preventive care benefits. Because short term medical insurance policies are designed to provide temporary coverage, they mostly include benefits for unexpected injuries and illnesses and not preventive services.
How Much do Short Term Medical Plans Cost?
Premiums for temporary coverage are typically less than they are for unsubsidized ACA plans because short term plans provide less coverage and include more limitations and exclusions.
A Consumer Reports article cites the ACA average individual monthly premium in 2018 was $490, compared to an average short term medical premium of $107 that same year. This gives us a ballpark understanding of the premium cost difference.
But remember, it’s not possible at all to really compare short term and ACA premiums when shopping for coverage because these are two vastly different products (remember the list of differences above). As with many things in life: you get what you pay for.
When it comes to health insurance it’s critical to weigh your individual healthcare needs and obtain the right coverage for both your health and budget. Paying a lower monthly premium for a policy that won’t actually provide you the level or type of benefits you need isn’t a sound healthcare or financial decision.
And remember, some people qualify for ACA subsidies to help offset the costs of ACA plans (premium tax credits and/or cost-sharing reductions).
You can determine how much ACA coverage will cost you by using an ACA calculator to determine if you qualify for a subsidy, then shop available plans from your state exchange or the federal Marketplace, or away from the Exchange. Then obtain short term medical quotes and compare costs and coverages.
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Summary + Next Steps
We’ve discussed some short term health insurance basics in this article, including:
- What short term medical is compared to ACA insurance
- What short term health insurance covers and
- Generally how much premiums cost compared to ACA plans
Remember, short term health plans are not replacements for ACA coverage. If you think a short term plan may be a good option for you, learn more about who may benefit from a short term health plan and how to find the best short term health plan for you.
Want help understanding which health insurance options may be right for you? Call (888) 855-6837 to speak with a health insurance agent today.
- How to Find the Best Short Term Health Insurance Plan for You
- Is Short Term Health Insurance a Good Idea? Advantages and Disadvantages
- Why Buy Short Term Health Insurance and is it Right for You?
- Short Term Health Insurance Initial Term and Max Duration Limits by State
Check Plan Availability and Get a Short Term Health Insurance Quote