Short term health insurance may be your only coverage option post Open Enrollment. Every year, Americans have a four month window to buy health insurance through the Health Insurance Marketplace. After January 31st, those looking to buy health insurance must have a qualifying life event to purchase coverage.
Last week, I wrote an article titled, “Buying Health Insurance Post Open Enrollment.” This article gives a summary of the qualifying life events–such as moving or giving birth–that qualify you to buy health insurance after Open Enrollment. If you find that you don’t qualify, don’t panic! Short term health insurance is a good form of interim coverage to help you through a period of being uninsured.
Defining Short Term Health Insurance
Think of a short term health insurance as an inexpensive, temporary solution to stay insured. You might have missed Open Enrollment, so you need health insurance coverage to hold you over until the next Open Enrollment opens on November 1, 2016. You may be waiting to enroll in your employer’s health insurance plan for three months. If this is the case, short term health insurance can keep you from being uninsured during the three months.
There are all sorts of reasons for not having health insurance coverage. If you find yourself without coverage, you can buy short term health insurance from Blue Cross Blue Shield of Tennessee from $16 to $42 dollars per month. This is a pretty inexpensive way to protect your health.
Short term health insurance coverage
Don’t expect short term health insurance to provide the benefits of a normal health insurance policy. Short-term health insurance plans do not have to cover pre-existing conditions. Also, insurance companies can rescind the offer of coverage at anytime for non-health reasons such as non-payment.
The coverage of a short term health plan is catastrophic. This means that this type of health insurance is designed to protect against a serious accident like a near-fatal car accident or sudden, major illness like a heart attack. These plans provide funds into the millions to guard against these accidents–the highest maximum I’ve seen is $1.5 Million!
Normal, routine benefits are covered under short term health insurance plans. However, they will not be free or low-cost. Normal major medical plans usually cover preventative wellness like doctor visits and prescriptions for free or low cost. Expect to pay high prices for doctor visits and prescriptions under a short term health insurance plan.
How soon can I buy a short term health insurance plan?
Normally short term health plans go into effect the day after the application was recieved. In other words, you can buy a short term health plan today, and you will be covered tomorrow. In my experience, insurance companies require short term customers to pay up front for the insurance coverage to begin. Once you make the payment, you have access to the health insurance coverage.
This is a huge advantage of a short term plans! Normal health insurance policies start on the 1st of each month–not the next day. Customers who buy major medical health insurance plans must wait anywhere from two weeks to 1.5 months for coverage to begin.
How long will my short term health insurance coverage last?
If you like, you can buy short term health insurance for an entire year. Usually, the plans charge month-to-month, but I’ve seen instances where a person can buy one month to 6 months of a coverage at once. The magnamimous Obamacarefacts.com backs me up and says that these plans last anywhere from 30 days to 12 months.
A major drawback to short term health insurance
Short term health insurance will not save you from paying the penalty. I am speaking about the $695 annual fee per adult taxpayers must pay for not having health insurance. You might be raising your eyebrows and saying, “if I have a short term health plan, I have health insurance, right?”
Yes. You do have a form of health insurance that protects your assets (house, savings, etc.) against a major medical catastrophe. However, the IRS does not qualify these plans because they do not include minimum essential coverage. More information on what this means can be found here.
Basically, plans that don’t provide a broad spectrum of health benefits are plans that lack minimum essential coverage. The IRS is quite vague on the specifics of these benefits, but short-term health insurance plans are in the same category as dental plans, vision plans and worker’s compensation plans as far as limited benefits go.
Taxpayers can go 90 days without any form of health insurance without having to pay the penalty. However, 90 days is a huge window in which a serious medical emergency can happen. It is a good idea to protect against catastrophe for $40/month in exchange for a million dollars of coverage.
Buy short term health insurance at your own risk
Short term health insurance is affordable, convenient and temporary. These plans can be really good health coverage options is you need a health plan to tie you over until the next Open Enrollment. These plans can also be a great option if you need a plan to hold you over until the employee health coverage begins.
If you have ongoing medical issues, then a short term health insurance plan might not be a good option. Pre-existing conditions are not covered, and the insurance is not guaranteed. The prices of seeing doctors and filling prescriptions can be high if you choose a short term plan.
Finally, short term plans do not exempt you from the tax penalty. The IRS does not see these plans in the category of minimum essential coverage. Everyone has a three month grace period where having health insurance is not required. However, there is a looming $695 annual penalty for those who are not covered under a qualified health plan.
Philip Strang is the resident copywriter for American Exchange. He splits his time between enrolling persons in qualified health plans and writing on topics pertaining to the Health Insurance Marketplace.