By. Rachel Cullor
June 25, 2015
The health insurance industry has changed so much in the last few years. In the past, consumers could purchase major medical coverage at will. The carriers would ask health questions, and based on the answers, they could mark up the rate of the applicant or deny them coverage altogether. Now, with the Affordable Care Act, consumers no longer have to worry that they will be charged more for their health condition, or labeled as too big of a risk and be denied coverage. However, since the carriers have lost the ability to deny coverage, there is an annual Open Enrollment period that consumers who are purchasing qualified health plans must adhere to in order to buy coverage. So, if a consumer doesn’t enroll by the deadline, they generally will not be able to get that coverage until the next Open Enrollment period begins.
I say generally because there are some exceptions to that rule known as special election periods, or SEPs. Certain life events such as marriage, divorce, having a child, adoption, aging out of a parent’s plan at age 26, involuntarily losing employer or government sponsored coverage (i.e. Medicaid, TriCare, Medicare, VA, etc.), or moving to a new coverage area can grant you a 60 day window to be able to purchase coverage.
What if I don’t have an SEP? Can I get coverage?
The answer is maybe. Your only option for major medical insurance comes in the form of short term insurance plans. Short term plans are designed for use for a specific amount of time, usually less than 12 months, and are typically affordable. They can be customized to an extent, letting you control the cost by choosing from a group of deductibles, out of pockets, and sometimes, even the coinsurance percentage breakdown between the carrier and the consumer.
There a few key differences between the short term major medical plans and the qualified major medical plans. Since short term plans are not considered qualified health plans, they generally have health questions that the applicant must answer. Depending on those answers, they can be denied coverage. Another big difference is that while qualified health plans provide coverage for pre-existing conditions, short term plans DO NOT cover any pre-existing conditions, although some carriers limit that exclusion to any pre-existing conditions within the last five years immediately before the coverage becomes effective. And while qualified health plans include coverage for preventative care at 100%, short term plans DO NOT provide coverage for preventative care or well visits. In fact, short term plans generally only cover services deemed as medically necessary.
Payments for short term plans
We have seen a pattern regarding the payment options available on short term plans throughout all carriers we work with: Most carriers require that all short term plans be set up with an automatic payment. Most carriers offer a monthly payment option, while some let the consumer set up payment quarterly, semi-annually, or annually. Some even give discounts to consumers willing to pay the whole premium for the coverage period up front. Another pattern we have noticed is that some companies have a one time application processing fee that is added to the first month’s premium price, typically between $20 to $30.
Key Factors to Consider While Shopping for Short Term Plans:
Network – Each carrier has significantly different networks, and whenever shopping for any type of health insurance, you should thoroughly research which doctors and hospitals accept the plan. Knowing exactly which medical providers and hospitals are in the network will help you understand what your responsibility of the covered expenses would be.
Exclusions – Every short term policy will list services or charges that are excluded from being covered. Things like pregnancy or childbirth, eye exams, cosmetic surgery, dental services, and chiropractic services are common exclusions from carrier to carrier. A full list will be available in brochures as well as the policy documents, and should be reviewed in depth.
Early Cancellation Policy – Some carriers will offer partial refunds for policies that are cancelled early. Other carriers will just let the policy continue until the end of the term, and some will cancel the policy early but offer no refund of unused premium. Also, some carriers require a written request to cancel a plan.
Non-Qualified Health Plan – We have a lot of consumers who call to enroll in a short term plan to get out of paying the penalty for not having health insurance. Short term plans are not qualified health plans, therefore, they DO NOT exempt you from the penalty mandated by the Affordable Care Act.
Although there are some restrictions in getting and using a short term plan, they are a great option for qualifying applicants to protect themselves financially from unexpected medical expenses until the next Open Enrollment allows them to enroll in a qualified health plan.