With open enrollment now over for most of the country, your only option for health insurance in 2021 might be short term health insurance. But you might be hesitant to try a short term plan. Maybe you’ve heard bad things about it, or you think the ads sound too good to be true.
First things first: short term health insurance is real health insurance.
Now, it’s not the same as the kind of coverage you get from a job or the Affordable Care Act marketplace. In other words, it’s not comprehensive. There are limits. That’s because short term health insurance is designed as a stopgap against unexpected medical bills.
It’s the kind of health insurance that used to be more common, long before the ACA changed the rules on comprehensive coverage. Short term plans generally cover surprises, like a bad fall at home or a random bout of the flu that sends you to the hospital. They don’t (usually) cover things like routine care or preventive vaccines.
So if you’re looking for a robust health plan with lots of bells and whistles, short term ain’t it. But if you just need a safety net to guard against absurdly high medical bills, short term health insurance might fit the bill.
Here are three valid reasons to consider short term health insurance — and one good reason not to.
#1) You’re in flux.
New job but benefits don’t start for six months? Aging out of your parents’ health plan but can’t quite afford something on your own yet? Graduating college and can’t find a good option? These and other similar scenarios point to one thing: you’re in flux.
And when you’re in flux, you may need a health plan that’s as flexible as your situation.
Short term health plans may not cover the full list of benefits that an Obamacare plan covers, but they do provide a temporary safety net. And that temporary net might be just what you need while you’re waiting for something more robust to come along. These plans:
- Last anywhere from 30 days to just under a year
- Can be renewed for up to 36 months
- Cost much less than a typical major medical plan
You can sign up for a short term health plan anytime and drop it just as easily.
Let’s say you get a great new job, but your benefits don’t start until you’ve been with the company for six months. A short term plan could help you bridge that gap in coverage until your job-based benefits kick in. You could enroll right away, then drop it once your new benefits start.
Being in flux can be a good reason to try short term health insurance. It’s the kind of temporary gap coverage you might need in the interim.
#2) You’re between health plans.
Along the same lines, if you’re between major medical plans at the moment, short term health insurance might be a good option to bridge that gap. Temporary health plans are just that — temporary.
They’re not designed to cover everything you might need. They’re designed to cover medical problems that you don’t see coming.
You might be between plans for different reasons, like:
- You’ve just turned 26 and have to leave your parents’ health plan;
- You had great Obamacare coverage, but the premiums got too high and you couldn’t find an affordable alternative;
- You missed open enrollment and don’t qualify for a special enrollment period; or
- You’ve retired early but don’t yet qualify for Medicare.
Any of these sound familiar? You might think you need to wait until you can get major medical again, but consider your short term options in the meantime. No one can predict an accident, illness or injury — that’s what insurance is for, after all — so having something in place is a good idea if you can swing it.
#3) Major medical costs too much.
Health insurance is expensive. There’s no denying it.
And while it’s true that most people qualify for subsidies to lower the cost of health insurance on the Affordable Care Act marketplaces, it doesn’t help everyone. Plus, even if the monthly premiums for comprehensive health insurance are low, that doesn’t mean the actual cost of having coverage is low.
Lower premiums usually mean higher cost sharing, like deductibles or what you pay out of pocket when you get medical care. Having to meet a $5,000 deductible before your health plan chips in at all isn’t necessarily helpful.
Short term health insurance might be the answer in this case. Premiums are typically low, even for plans with reasonable deductibles. You may find coverage for well under $100 for individual plans. Just keep in mind that:
- Deductibles vary, just like with major medical. As we said, lower premiums usually mean higher costs when you get care. Look at the cost details carefully before you commit.
- You might have different deductibles. This isn’t a guarantee, but some short term plans may charge different deductibles for different things, or they might have multiple deductibles per plan period.
- These plans don’t cover everything. We’ve said it before and we’ll keep saying it: short term plans aren’t meant to cover all of your medical bills. (No plan is, actually.) These plans are made to act as temporary safety nets. You’ll likely pay less than you would for major medical, but it’s not a comparable plan.
There you have it. Three good reasons to try short term health insurance. If you don’t have other options and you need something to tide you over until you can get comprehensive coverage, a short term health plan might be just the thing.
But there’s one good reason not to try it . . .
And that’s if you have access to affordable major medical coverage.
Again, short term health insurance is not the same as comprehensive, ACA-approved health benefits. It offers a nice safety net when you can’t get something else, but it’s not going to offer all the same benefits as a robust health plan. It may not, for example, cover things like:
- Pre-existing health conditions
- Preventive care, like annual wellness checkups for your kids
- Prescription drugs
- Mental health services
Some select short term health plans might actually cover some or all of these, but it’s not common. It’s also not guaranteed.
If you have a health condition — say, diabetes — then a short term plan probably isn’t going to be a good choice for you. That plan may still cover you if you trip and sprain your ankle. But it’s not going to cover anything related to your diabetes since it’s a pre-existing condition.
Point being? If you have access to affordable major medical coverage, seize that opportunity. Plans that comply with the Affordable Care Act cover 10 essential health benefits and make sure people with pre-existing conditions can get coverage. They also come with a host of other consumer protections.
Missed open enrollment this fall?
Depending on where you live, you may still be able to sign up for an Obamacare health plan. If you live in one of the following places, enrollment for 2021 health insurance ends on January 31st for you:
- Massachusetts (ends January 23rd)
- New Jersey
- New York
- Rhode Island (ends January 23rd)
You might instead qualify for your state’s Medicaid program. Most states expanded their Medicaid programs under the Affordable Care Act. In fact, there are only a dozen states that haven’t as of January 2021. Check to see if you qualify. It might be a good option for low-cost or free health insurance depending on your situation (and where you live).
Note: if you qualify, you can enroll in Medicaid at any time during the year. No need to wait for open enrollment.
Don’t forget about other options, too, if you belong to a specific group or a Native American tribe. Veterans have several options for health insurance, for instance, and members of Native tribes may find help through the federal government’s Indian Health Service.
And if you’re dealing with a major life change, like job loss or a new baby, remember that there are special enrollment periods that let you sign up for or change your health insurance, depending on the situation. We’ve got a roundup of what to do if you missed open enrollment here.
Short term isn’t for everyone, but it could be helpful.
You can’t plan for everything. But you don’t have to sacrifice your savings account for one unexpected medical mishap. It doesn’t hurt to take a look, anyway. You might find something reasonable for a good price while you’re in flux or saving your pennies for a health plan with broader benefits.