Short Term Health Insurance Blog
Monday, April 24, 2017
When you find yourself suddenly unemployed, you might wonder whether the right insurance coverage for you is short term health insurance or COBRA insurance. It’s important to understand how the two differ before you make your choice.
Short-term health insurance is less expensive than COBRA insurance, sometimes costing less than a third of COBRA insurance. This makes short term health insurance the first choice for many. The cost factor becomes especially significant because the plan holder does not have a job, and can ill afford expensive insurance at that point.
The reasons that short term health insurance is less expensive is that short term health insurance typically does not cover pre-existing conditions, as its nature is to provide a stop-gap arrangement. However, COBRA insurance is meant to continue the coverage you were getting when you were employed, so that you need not suffer additional agony because of the loss of your job.
Most people choose short term health insurance to tide over the temporary period, and that will work for you too if you or your dependents do not have any pressing pre-existing conditions that need to be taken care of.
When one short term health insurance plan ends, another may be required to take its place. This can happen because of many reasons—perhaps the anticipated long term coverage is taking longer to materialize, or perhaps some formalities need to be ironed out before you sign on to the other plan.
It could also be that you are simply replacing the plan because the maximum plan period has run out. Most temporary health insurance plans will let you know, either through e-mail or through snail mail stating that the coverage period is almost over. Usually, an application for renewal of the plan is included.
If you reapply within a certain time period as specified by the plan, coverage can begin as soon as the earlier coverage ends without any gap. For example, if you have a Secure 12x3 Short Term Medical plan that terminates on June 30, if you reapply before May 30, you can enjoy uninterrupted coverage.
Most plans usually offer a new certificate of insurance and new deductibles and co-insurance amounts apply. Some of the eligibility requirements such as age restrictions will still apply, and if you are over 65 years of age when you reapply, for example, you will not be eligible for another plan.
Short term health insurance comes in many shapes and forms. One of the plans, the Secure 12x3 Short Term Medical plan, provides a range of benefits for the plan holder for a maximum period of 12 months per plan.
Benefits are limited to the usual, reasonable and customary charges for a covered expense. Some benefits feature stated limits as well. Coverage includes sudden and unplanned medical expenses such as four doctor visits per 12-month period up to $25 per visit, hospitalization charges for regular care and critical care, outpatient charges such as surgery, ambulance services, emergency room, and doctors’ miscellaneous charges, organ transplants, AIDS treatment, mammography, and pap smear tests. Most of these covered expenses feature limits.
For example, the outpatient emergency room benefit features a maximum of $500 per day, including the physician charge, 24-hour surveillance, and other miscellaneous charges. The maximum benefit amount per coverage period is $750,000.
Pre-existing conditions are not covered by the plan, and the look-back period for pre-existing conditions is five years. However, if you purchase a Secure 12x3 STM plan for one year, the next two years will include pre-existing condition coverage, regardless of when the pre-existing condition symptoms were last noticed. As always, it is best to read the fine print of a plan before signing on.
With low costs and flexible coverage options, short term health insurance might be considered ideal coverage by many—even those with some long term health insurance coverage. However, temporary health insurance may not make sense in all situations, nor is it for everyone. Here’s a check list to help you figure out if it is the right type of coverage for you.
Do you expect that long-term health insurance will be available to you within the next six months? If yes, then short term health insurance may be the best option available at this point in time. Are you young and healthy and want to insure yourself only against unplanned medical emergencies? Short term health insurance is probably the best idea for you.
Do you have significant pre-existing conditions that require regular treatment, such as heart disease? If yes, then short term health insurance may not be for you, because most plans exclude pre-existing conditions from coverage. Are you eligible for long-term health insurance or Medicare? If so, then that may be a better option than short term medical insurance.
Remember that short term health insurance is a great option that provides health insurance, but only as a stop-gap arrangement. You also want to check that your short term health insurance plan is counted as creditable coverage toward future long term coverage.
Most short term health insurance plans do not cover maternity expenses for the first 12 months, and it is considered on par with a “pre-existing condition.” This may seem unfair, and one of the questions often asked is simply why that is the case.
While for a couple planning a pregnancy, it might seem like a medical condition, pregnancies are, for the most part, planned. From the temporary insurance company’s perspective, this means that the probability of the plan holder getting pregnant (if the couple is planning a baby) is too high to be considered worth the risk.
So, most short term medical insurance plans do not cover pregnancy or conditions arising from it. Some of the plans that cover pregnancy add it as an optional rider for other short term medical insurance, with premiums as high as $500 per month. This is very close to the actual medical costs of the pregnancy, and often represents just a negotiated rate with healthcare providers.
However, some short term health insurance plans provide coverage for maternity if the plan holder has been covered under the plan for more than a year. These plans are typically more expensive than plans which do not cover maternity even after a waiting period. Read the fine print and consider your goals before signing on to a temporary insurance plan.
Temporary insurance may be short term coverage, but it sure is no fair-weather friend. Most short term health insurance plans extend coverage if you are ill or injured when the plan expires. If you are well and able, all benefits will cease the day the plan expires.
For instance, if you are hospitalized the day your coverage ends, you will get an extension of coverage in most plans. While the level of coverage will decrease and will depend on the individual plan, you will certainly not be thrown out of the hospital!
Under the Assurant Short Term Medical plan, if you become ill or hospitalized when you
are covered by the plan, you may receive continued coverage at no additional cost for 12 months on hospitalization, and $1,000 in medical benefits for up to 60 days if you have a non-disabling condition.
However, note that when the plan expires, you will need to purchase a new plan, and the condition you have been treated for will be excluded under the pre-existing conditions clause. Needless to say, it is always best to read the plan carefully or understand the coverage offered completely before signing on to a plan.