What Is Short Term Medical Insurance – Overview
Short-term medical insurance is a type of health insurance policy that offers temporary insurance coverage. This coverage normally extends for a few months and up to a year. The Affordable Care Act (ACA) does not regulate this type of health insurance policy.
Consequently, these insurance plans do not necessarily have to offer minimum essential health benefits, as required by the ACA, such as inpatient and outpatient care, mental health care, and coverage for prescription drugs.
Short-term medical insurance plans don’t necessarily offer coverage for pre-existing health conditions. These insurance plans are meant for healthy individuals and usually have limits on how much they will pay for certain healthcare services or a total reimbursement amount.
More about Short Term Medical Insurance
Short-term medical insurance plans may have an initial term of 364 days and can be renewed for a maximum of three years. However, some states have even stricter restrictions regarding coverage duration. You can choose to sign-up for short-term insurance at any time of the year and do not necessarily have to do it once a year as required for insurance plans bought through the marketplace.
Short-term medical insurance is best suited for the following:
- Previously uninsured
- Transitioning between jobs
- Waiting for employer-sponsored insurance coverage
- Transitioning out of a welfare program
- Young adults leaving their parents’ insurance plan
- Recent college graduates
- Those who have missed the open enrollment period
- Veterans transitioning out of the military
- Retirees who are not yet eligible for Medicare coverage
Eligibility for Short Term Medical Insurance
Individuals who can pass an insurance provider’s medical underwriting rules can buy a short-term medical insurance policy. This usually means those individuals who are under 65 years and in significantly good health.
Underwriting is a term used to define how an insurance provider determines your health status and whether you are feasible for insurance coverage, the price of coverage, and exclusions in the plan.
However, there are 11 states in the US where short-term medical insurance has yet to be available. These states have either banned them outright or implemented strict rules regarding insurance plans.
So, you may not be able to buy short-term medical insurance if you live in Colorado, Connecticut, Hawaii, California, New Jersey, Massachusetts, Maine, Rhode Island, New Mexico, New York, and Vermont.
How to Qualify for Short Term Medical Insurance?
There are no strict mandates or regulations governing the purchase of short-term medical insurance. You can simply select a plan, sign-up, and pay for coverage.
Most short-term medical insurance policies use very limited medical underwriting for applications. These policies usually have a bunch of Yes/No questions about specific medical conditions and offer coverage to any individual who can answer “no” to all the questions.
In addition, “post-claims underwriting” lets the insurance provider examine your medical records. This helps to determine that your present health problems are not a result of pre-existing health conditions when you file a new claim. If this turns out to be the case, then the insurance provider has the right to reject the claim and even rescind your insurance policy.
Cost of Short Term Medical Insurance
Short-term medical insurance plans are comparatively cheaper than conventional long-term medical insurance plans. On average, short-term insurance plans cost as much as 50% to 80% less than conventional market-based insurance plans. However, as with any other type of insurance, the specific cost of short-term medical insurance varies according to different factors.
For instance, the cost of medical insurance will vary based on your age, location and the level of coverage you wish to have. Any short-term medical insurance plan with extensive coverage will cost more. However, short-term medical insurance coverage costs can be as low as US$ 10 per month.
The excellent affordability provided by short-term medical insurance plans is one of the main reasons for their growing popularity.
Coverage of Short Term Medical Insurance
Short-term medical insurance policies normally cover the cost of unexpected medical needs, which includes hospitalization and surgical treatments. However, it is important to know that these are usually basic plans with restricted maximum benefit limitations. You should also read the fine print carefully and read about the extent of coverage before paying for any short-term medical insurance policy.
Short-term insurance plans are advisable for individuals who cannot buy ACA-compliant insurance plans from the marketplace. The reasons for this can vary and usually relate to a significant change in life, such as the loss of a job or transitioning between two jobs.
Hence, it may be possible that you might not always have to buy short-term medical insurance. However, if you decide to buy short-term insurance, you will need to consider the provider network, the deductible, and the extent of coverage.