A short-term health insurance plan is ideal for you if you want to avoid a coverage gap.
This type of insurance, which is sometimes referred to as term health insurance or temporary insurance, is one that lasts less than a year.
These plans may be renewed, as long as the original plan and the renewal combined do not exceed 36 months.
If a customer requests renewal and receives approval, he or she will have another term of coverage.
Some companies do not offer renewals, which is why it is important to research different short-term options.
The research to understand different types of health insurance will give you a better idea of the pros and cons of each plan, what is typically covered, what is not covered, how they compare to standard plans and more.
For more on short-term insurance, continue reading below.
An Explanation of Short-Term Health Insurance
A short-term health insurance plan usually allows you to choose exactly when the coverage ends.
You may benefit from temporary insurance if you only need coverage for a small amount of time, or until your regular insurance plan kicks in.
You may also need it if you have recently switched jobs and your previous job provided insurance, or you are ready to leave your parent’s plan but are not quite ready to purchase major medical insurance.
Fortunately, many short-term providers offer affordable premiums and have several premium options available.
Keep in mind, however, that temporary insurance has its limits.
It mainly covers unexpected injuries and hospitalization costs. It may not cover prescription drugs, maternity care, pre-existing medical conditions and certain other health expenses that are typically insured under a standard plan.
Furthermore, short-term coverage may not offer deductible credit transfer, meaning your deductible will not be honored if you have already met it for the year under a previous plan.
Most short-term plans establish a dollar limit on how much the company will pay for health expenses that occur during your coverage term.
In addition, you may be denied insurance for a short-term plan depending on your medical history and whether you have a pre-existing condition.
Standard healthcare providers may not deny you insurance for these reasons.
However, you will no longer face a penalty under the Affordable Care Act for using short-term insurance.
Even though you may not receive an extension on existing short-term coverage, you may qualify for a renewal.
You may even apply for insurance with a company that offers a “guaranteed issue”, which means that you will not be declined based on your medical history.
It is also important to remember that short-term and standard health insurance is very different from one another.
When comparing short-term plans, you may also want to compare each plan to standard coverage options to see whether temporary insurance is worth it.
If you select a plan, you must wait around 14 days to receive an approval or denial decision.
Standard insurance companies, on the other hand, may take between two and six weeks to give you a decision notice.
What happens while you are on a short-term health insurance plan?
When comparing different short-term coverage options, it is very important to look at the different benefits available.
It is recommended that you read through the out-of-pocket costs and the terms and conditions as well.
For the benefits that are covered, your short-term plan will work similarly to a standard health plan.
For instance, you must still pay a monthly premium in order to use your benefits.
You may also be limited to visiting certain hospitals within your network. In other words, only certain healthcare providers will be approved for your plan.
Visiting an out-of-network provider may result in you paying the full amount for the care you receive.
You may be required to pay a copayment on hospital procedures.
You may also be required to pay for some procedures in full if they are not covered under your insurance.
However, you may have an out-of-pocket maximum, which is the maximum amount you may pay for out-of-pocket services.
If you hit this amount, your insurance provider will pay the remainder of these costs for the rest of your term, up to the coverage limit.
Keep in mind that you may still have medical bills if a procedure costs more than your coverage limit.
Coverage limits are typical for short-term plans and may greatly influence how often you visit the doctor, especially if you do not want to hit your limit before your plan ends.
Many short-term coverage plans offer emergency care benefits, hospitalization benefits and benefits for certain doctor’s visits.
A portion of these medical expenses will be paid by the provider, but another portion will always be paid by you in the form of a copayment or annual deductible.
Remember that some providers may establish limits to how many times you can visit the doctor, which are determined by the length of your coverage and other factors.
Ultimately, short-term coverage is only a temporary solution, because it is mainly designed to cover you in the event of an unexpected injury or illness.
Even then, it will not cover the total cost of your emergency medical expenses.
For example, you will still have to pay a deductible, which is the amount you must pay for certain care before your insurance kicks in.
Otherwise, you may have coinsurance, in which your insurance pays a certain percentage of the medical costs and you pay the remaining portion.
When to Find Short-Term Health Insurance
You may consider applying for short-term health insurance if you recently accepted a new job offer and your insurance coverage from a previous company is ending soon.
You may also need short-term coverage if you recently got divorced and your family no longer qualifies for a family health insurance plan, or if you are a young adult and no longer qualify for your parent’s plan.
Unlike major insurance providers, which will not allow you to sign up at any time unless you have had a qualifying life-event, temporary insurance is offered year-round.
A qualifying life-event may be a recent marriage, a newborn baby or the unexpected loss of employer coverage.