In your search for competitive health insurance rates, you may have heard some products being described as “short-term, comprehensive” health insurance. Unfortunately, this is a misuse of the terms. Truth be known, short-term health insurance is by definition, non-comprehensive and limited in scope. Any insurance company that issued a comprehensive policy on a temporary basis would be asking for trouble so they just don’t do it.
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According to the Minnesota Department of Health, short-term health insurance is designed to be temporary coverage for people who find themselves in between jobs or not able to afford to continue previous coverage under the COBRA program. However, because it’s temporary, it most certainly doesn’t cover pre-existing conditions. In addition, most short-term health insurance policies don’t cover things like maternity leave, chronic illnesses, or any major issues like cancer treatment. They are designed mainly for routine care and unforeseen accidents and illnesses.
Who is eligible for short-term health care coverage?
Anyone who can afford to pay the premiums can purchase short-term health insurance coverage. That said; all of the individual states have their own rules and regulations regarding how such health insurance plans are administered. Some require insurance companies to provide policies to anyone who wants them, at any time, while other states require individuals to have previously had health insurance coverage sometime within the previous two years.
Furthermore, short-term health insurance is temporary by the very definition of the term. You won’t be able to renew your policy more than twice, and if you’ve made any claims of significance on your current policy, many health insurance companies will not allow you to renew at all. These steps are taken by insurance companies to prevent individuals from using short-term health insurance as their primary insurance. The only way to do that is to limit the number of times an individual can renew a policy.
Why would insurance companies want to limit renewals?
Because of its nature, short-term health insurance is significantly less expensive than standard comprehensive coverage or major medical. If insurance companies allowed customers to continually renew short-term insurance without any restrictions, consumers could effectively “beat the system” by electing this less expensive coverage and continuing it for years on end. Allowing that would put severe financial strain on an insurance company and, in the end, cause everyone’s rates to go up.
Limiting renewals forces consumers to purchase standard insurance at some point, if they want to continue having medical coverage. This is a way to help keep the cost of temporary health insurance as affordable as possible while still providing consumers with decent coverage. By structuring things this way, the insurance company is trying to balance its own financial needs with the needs and desires of consumers. Limiting renewals on temporary insurance is the best way to do this.
If I need comprehensive coverage, what should I do?
Since short-term health insurance is not comprehensive coverage, you’ll have to seek out a standard policy from your insurance company or apply for a government subsidized program. If you’re currently in between jobs, hopefully your eventual new employer will offer you comprehensive coverage. You may also qualify under your spouse’s plan if he or she has family coverage. Regardless, if you need comprehensive coverage a short-term policy is not the way to go.
Barring all else, you can acquire comprehensive coverage on a direct basis from most major medical health insurance companies. This is by far the most costly way to do things, but it is possible. For example, there are many self-employed individuals who do not qualify for government-subsidized programs or group health insurance, who are forced to purchase their own policies directly. Unfortunately, these individuals pay among the highest health insurance rates in the nation.
Will the new healthcare law make any difference?
When the new healthcare law is fully implemented in 2014, it will make the question of temporary health insurance moot. Every adult will be required to purchase some sort of health insurance, be it through an employer, an exchange, or directly from an insurance company – or face heavy penalties from the government. If all goes as planned, it should result in every American being covered in some way, shape, or form.
It’s important to note that the U.S. Supreme Court will be taking up the constitutionality of the healthcare law next spring. If ruled that the individual mandate is not constitutionally legal, then you’ll still have the opportunity to buy temporary healthcare insurance if circumstances dictate.
Whether you need short-term insurance or comprehensive coverage, you can search online for health insurance quotes by entering your zip code below.