Updated July 21st, 2018
If you need temporary health insurance, also known as short term health insurance, then you probably know that short-term coverage comes with some pretty significant drawbacks. It doesn’t count as major medical insurance, so you won’t be protected from the penalty fee for not having coverage under the Affordable Care Act. Update for 2018, the Trump Administration has nullified the ACA’s penalty for not having health insurance coverage that meets the minimum requirements under the ACA. Or put another way, the Obamacare tax penalty is no longer going to be in effect on a federal level moving forward. Some states may decide to overturn that, on a state level.
You also may not be eligible if you have a pre-existing condition, and while premiums might be lower, you’re likely to have higher deductibles and higher out-of-pocket costs than you would with major medical coverage.
Still, temporary plans make sense for some people. If you’ve just started a new job but your insurance hasn’t kicked in yet, then short term health insurance can bridge the gap until you’re covered. It can also help you if you need proof of insurance for traveling or humanitarian aid purposes. For individuals with no health problems and no kids, short term insurance may be cheaper to maintain even with the penalty fee and out-of-pocket costs.
Despite the benefits of major medical coverage in a post-ACA health care system, sales of short-term policies have actually risen since 2014 according to The Wall Street Journal. Some people simply prefer them to more traditional policies. Once you’ve decided that the benefits of temporary coverage outweigh the risks, here are some tips for finding the best policy for you.
Go Ahead, Shop Around, Just Do So Carefully
Medical coverage can be even more daunting to shop around for than car insurance, but it’s a crucial part of the decision-making process. All insurers are not created equal, and even an insurance company with a stellar reputation means nothing if it doesn’t offer you what you’re looking for in terms of temporary coverage. The most challenging aspect of shopping for short-term protection is that it’s hard to find apples-to-apples comparisons of available policies. The ACA marketplaces make this easy for major medical coverage, but you’ll have to dig deeper to find the same info on temporary policies. Keep the following questions in mind as you compare plans, or use a consumer focused resource that is focused on comparing short term health insurance policies. Our suggestion, is to use ShortTermHealthInsurance.com, an informational site that is now owned by HealthNetwork Group. Disclosure, it was acquired in April of 2018, approximately two years after this article was first published.
- How much are the premiums, and how do they compare to the deductibles, out-of-pocket costs, and maximum payout limits?
- How much will I have to pay in coinsurance? What are copayment rates?
- What services, procedures, medications, and treatments are covered? What isn’t covered that might be important to me?
- How wide is the network of providers? Can I see anyone I want to see, or do I have to stick to a select group?
- If I’m out of state and get sick or injured, am I covered?
- Does the plan include prescription coverage or any extras, like dental or vision coverage?
- What’s the process for getting a new plan once my term ends?
- How well-known is this insurer, and what is its general reputation?
It’s easy to apply for short term health insurance once you’ve decided on a company. Between direct consumer websites and third-party insurance portals, insurers are making it easier than ever to apply online and get covered within the span of a single day. But before you sign up, make a call to the company’s customer service line to see how they handle questions. You may appreciate the convenience and anonymity of the website application process, but interacting with a customer service rep will give you a better idea of how the company treats its customers. This will also give you a heads up on how they handle claims. Good customer service can be the difference between a processed claim and additional out-of-pocket costs to you.
Ask For Discounts, But Don’t Actually Expect Them
When you’re comparing the costs of temporary coverage, ask about discounts. Unlike home and auto insurance, health insurance can’t be bundled into a package for a rate discount. This is especially true with major medical plans. However, short term health insurance isn’t regulated in the same way as ACA-compliant plans, which means you may have more flexibility in negotiating the cost with your insurer. There’s no guarantee that you’ll get a discount. In fact, you probably won’t. But it never hurts to ask if the insurer offers reduced fees for specific enrollees, like veterans or students.
Short-term health insurers do tend to offer a slight discount for people who pay for the full cost of their coverage up front, which is something they share in common with home and auto insurers. You may save a bit of money by prepaying your premium rate for the full term. Other discounts could include a reduced fee for add-ons, like dental and vision coverage, which may give you better protection in the long run and more value for the monthly cost.
Always Read The Fine Print – Or Get A Reputable Agent To Help You
Temporary coverage seems like a bargain if you look at the monthly premium rate. On the surface, these rates seem shockingly low compared against the average cost of major medical plans. But premium rates don’t tell the whole story. Some plans can cost a lot more when you add up out-of-pocket expenses and coinsurance rates. For instance, Golden Rule, which is the short-term company administered by United HealthCare, offers some plans with $10,000 deductibles – that’s how much you would have to pay before the company pays its share. They do also offer plans with lower deductibles, but you will be required to pay more for that kind of plan, just like with major medical.
Before committing to a plan, read the fine print carefully. Find out what’s covered, what isn’t and how much it’ll really cost you. Also, you should check the company’s “return” policy. Some short term insurers offer a money-back guarantee if you’re not satisfied within 30 days of having the coverage as long as you haven’t made a claim. This could also be useful if you end up getting major medical coverage through work or a qualifying life event on the ACA marketplaces. Ask your insurer if it offers a refund policy in the event that you need to get out of your contract early.
Go With The Pros
If you have doubts about the short-term policy you’re about to apply for, trust your instincts. Health insurance experts suggest using a reputable insurer over unknown entities. In addition to friends and family, check the following for recommendations:
- Consumer rating sites, like Consumer Reports, Consumer Affairs, JD Power, or U.S. News and World Report
- Health care forums for sites like WebMD or the Mayo Clinic
- Or sites that are focused on sorting out the good from the bad, like ShortTermHealthInsurance.com
The National Committee for Quality Assurance ranks insurance plans nationwide each year, a breakdown of which can be found on the organization’s website, but these rankings are typically for major medical plans. Still, it may be a good place to start to learn more about the company you’re interested in. Keep in mind that a top insurance carrier doesn’t guarantee a quality product. Not every insurer offers the same level of service and support for every product it offers. Major medical plans and temporary coverage differ significantly, so research your options thoroughly before signing up for a policy.