How Does Short Term Health Insurance Work?

Discussing Short Term Health Insurance Coverage

Taking a short term coverage plan while in between jobs or graduation is an affordable means of maintaining medical aid for a specified term. The plan can be purchased to cover periods between 4 and 11 months depending on the requirements of the policy holder.

How does it work?

It is important to learn the benefits of a short term insurance plan that best fits with individual needs. Specific forms of coverage may not meet federal requirements for minimum healthcare and as a best practiced should be determined before a policy is purchased or one could face hefty penalties.

Short term coverage consists of different types of insurance which can be adapted with changing needs within a specific period of time. In this form it is suitable for individuals who may be changing employment and do not wish to be without coverage in the mean time.

It is also beneficial for those who may have reached an early retirement and need a quick and easy solution for the maintenance of medical coverage. It would be helpful at this time to understand the options available to you, and learning about the effectiveness of particular policies.

In comparison to a regular policy, the shorter term contracts are only required for a specific period time. This assists a large number of consumers in the management of risk that is associated with medical emergencies, the costs of chronic medication, and related health needs. The temporary plan does not have to adhere to the typical standards.

Plans can be purchased directly from an insurer online or over the phone. Here are a few highlights for its short term flexibility:

  • Deductible and standard of medical aid that are offered.
  • This includes approved doctors and hospitals within a particular region
  • The choice of a deductible for a policy that can be afforded
  • Hospitalization, regular doctor visits, and medical assessments
  • Up to 80 percent in a long term plan will aid in settling the costs associated with prescription medication and other types of healthcare

Top things you need to know if you have a short term health plan

You are not protected from tax penalties

  • You get affordable care for a short period of time But, they don’t meet the standards of the Affordable Care Act. You may be subject to a tax penalty for being uninsured regardless if  you have a short term health plan.

Standard health insurance may cost less than what you thought

  • Standard health plans offer more benefits therefore are typically more costly. However, if you earn about $46,000 for a single person, you could qualify for a subsidy to reduce your monthly payments.

Compare and shop for the best plan

  • Open enrollment is only one time per year. Find out when these dates are. If you miss out you will not be able to get back in until next year when it opens again.

There is no guarantee with short terms insurance

  • You must apply again and again when it comes to renew.

You like filing claims? You will have to with short term insurance

  • Major health insurance plans everything is handled with the provider.

Take Aways

When your short-term health plan ends, you won’t automatically be able to buy a major medical health insurance plan. Without a qualifying life event, you’ll have to wait until the next open enrollment to be guaranteed access to health coverage. View the image below for detailed comparison between Major Medical Plans and Short Term Plans.

In summary: You may get lower premiums with short term plans, however you will sacrifice additional features that most people have and take advantage of in a long term plan such as the additional out of pocket expenses. On the other hand with Obama Care many people are experiencing high out of pocket expenses via meeting their deductibles.