Though traditionally used to bridge gaps between major medical health insurance policies, short term plans (STHPs) have grown in popularity over the last decade. For starters, these plans can fill a temporary lapse in major medical coverage, helping you offset costs of an accident or unexpected hospital stay. Others see reduced premiums as a particularly attractive incentive amid increasingly costly insurance options. Whatever the reason, people are more willing to accept the trade-offs when it comes to short-term health insurance. Let’s take a look at some of the numbers behind STHPs.
A Boost in Signups
From 2013 to 2014 interest in short-term health plans jumped by 130 percent according to eHealth. The ACA took effect in 2013, opening the marketplaces for the first time that fall. Right at the outset of Obamacare, consumers were worried about access to and the cost of major medical plans. Short-term policies remain popular even four years later, and it’s expected that these numbers will continue to climb given the uncertainty surrounding healthcare reform once more.
Young, healthy people are more likely to apply for short-term policies because these plans are cheaper. Plus, having few medical problems almost guarantees coverage. In fact, less than 10 percent of short-term health insurance applications get declined. The same eHealth study from 2014 found that one out of every eight applications was denied. These plans can discriminate against people with pre-existing conditions, but for the healthy, they can be quick and easy alternatives to major medical insurance.
Who Uses Short term Insurance?
Lots of people use short term health insurance, but it’s important to note that some people shouldn’t buy these policies. People with medical conditions or a history of illness would be better off buying major medical or ancillary benefits, like accident coverage, since short-term plans don’t cover the comprehensive set of benefits that major policies do. Nevertheless, there are certain groups of people who would benefit from putting something in place to account for unexpected medical expenses. These include:
- Young adults who’ve aged out of their parents’ policies and need to bridge the gap until employer-sponsored health insurance takes effect
- People who work part time and can’t get job-based coverage
- Those who miss open enrollment for the year and don’t qualify for a special signup period due to extenuating circumstances, like marriage or job loss
Of course, you may not want major medical coverage because it’s too expensive or too comprehensive for what you’re willing to spend. Because the individual mandate has been repealed – starting in 2019 – you won’t have to worry about the tax penalty for not having health insurance once 2019 starts. You may have to pay that fine in 2018, but it could still be less than paying premiums for a short-term policy that provides enough coverage for peace of mind.
There may be plenty of other reasons that people look to short-term health insurance as a viable option for coverage. These policies are limited in what they cover, but they can offer a safety net for surprise medical bills.
Short Term Insurance Under a Trump Presidency
In reality, no one knows at the moment what health insurance might look like in the immediate years to come. Thanks in large part to indecision at the federal level, political backbiting and partisan politics, healthcare reform remains stuck at an impasse. It’s not likely to change anytime, either. For these and other reasons, short-term health insurance may become even more attractive to those who want basic coverage without any strings attached.
President Trump and Republican lawmakers are committed to repealing Obamacare and replacing the ACA with a law of their own design. In the meantime, Trump has made it easier for short term policies to fill in gaps for the uninsured. Before Obama left office in 2016, his administration created a rule that limited short term policies to three months. Trump has since issued an executive order that would undo that rule, allowing temporary policies to be regulated by states as they used to. That means that you might be able to buy a short-term plan for up to 364 days in some states. But before you get excited, know that there are some serious drawbacks to buying a temporary policy. Short-term coverage:
- Isn’t guaranteed issue, meaning you’ll be subject to medical underwriting;
- Covers fewer benefits and limits the amount of benefit payouts; and
- Can’t be automatically renewed.
For people with medical problems or pre-existing conditions, short-term insurance is usually not an option. Major medical policies offer a bevy of robust benefits, such as maternity care or rehabilitative services, but at much higher prices. And if you like your short-term plan and want to renew for another period, you may or may not be able to since these plans can’t auto-renew like major medical plans can.
There are certainly occasions where short-term policies make sense, which is why they continue to surge in popularity. The statistics bear this out, as does the hope held by many that a new batch of policies aimed at healthcare reform will be rolled out soon. Before you decide on a health insurance path, consider your own personal needs, examine the policy itself, and make sure that you’ve got the right products in place for your own peace of mind, whatever the law might say.