Short term medical health insurance can be a great benefit if you find yourself temporarily uninsured. This includes people who have been laid off, early retirement, graduating from college, and people who are on strike. These policies are generally cheaper than individual private policies.
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Short term health insurance can fill in the gaps while you look for work or a new long term insurance policy. These policies are also a great option for people who want insurance for just their children and cannot get a family plan right away.
There are many other reasons people might need a short term health insurance policy. These policies offer coverage that allows people to avoid a lapse in coverage. The Health Insurance Portability and Accountability Act (HIPAA) says that insurance companies cannot include preexisting condition clauses if you have not had a lapse in insurance over 63 days.
How does short term health insurance work?
Short term health insurance companies offer policies which work similar to indemnity plans. You have the freedom to choose which doctor or facility you go to. The average length of a short term policy is six months but policies can be found with terms anywhere from 30 days to 12 months. You can get a policy for just you or for your family as well.
Short term health insurance policies offer low premiums because they do not provide the extensive coverage a comprehensive plan does.
You will have a deductible that you must meet before they begin to pay out on claims. In most cases the deductible will be $1000 to $2500 but can be higher.
After the deductible has been met the insurance company will typically pay 80% of covered claims. Some plans will pay 100% but these tend to cost more. Other plans will cover a certain portion of expenses until the deductible is met and 100% after that. Make sure you read the plan closely.
Most of these plans do not cover any type of prescription drugs. Insurance companies may offer you a discount card as part of your policy though. Maternity care is also usually not covered by these policies. Companies can also deny preexisting conditions or limit coverage.
What are the pros and cons?
There can be many benefits to a short term policy. Some advantages to a short term policy are that they are generally cheaper than comprehensive insurance or Cobra. Most companies will also provide you with a certificate of credibility which can be used when you go to get a new group policy to waive preexisting condition exclusions.
Another advantage is that while the coverage is limited it can save you if you end up in the hospital. A serious illness or injury can end up costing thousands more than your deductible if you have no insurance. These bills can financially ruin most families and account for 60% of the bankruptcies filed every year.
Short term policies have some disadvantages too.
Since short term policies fall under private insurance regulations they can deny preexisting conditions or limit coverage even if there is no lapse.
They also do not cover routine care in most cases or limit how many times you can see a doctor.
If you choose to get a short term policy you will no longer be eligible for a HIPAA plan. You are also limited on renewal terms. In many cases you cannot renew the policy at all. You would have to purchase a new plan and any medical problems that developed during your previous plan would now be preexisting and excluded from coverage.
Are there other short term options?
While short term health insurance policies may be a great option in some cases you may have other choices. Always research your options before purchasing a policy. The wrong health insurance can be a costly mistake.
If you have recently lost your job you may be eligible for Cobra insurance. Cobra is a continuation of benefits from your group plan for up to 18 months after your benefits expire. Cobra does cost more than what you paid through your employer. You will be responsible to pay 102% of your premium. This includes the portion you paid as well as your employer and processing fees.
If you do not qualify for Cobra, your benefits are running out, or your previous employer does not offer it, you can apply for a HIPAA plan. These plans offer the same benefits and premiums in most cases.
If you are considering choosing short term health insurance because you have been denied for private insurance due to preexisting conditions your state’s insurance pool may be able to help. Every state has a high risk insurance pool to help people who cannot get insurance. The premiums will be comparable to a private insurance plan.
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