Health Insurance Blog

Short term health insurance is a type of health coverage that can provide you with temporary medical coverage when you are in between health plans, outside enrollment periods, and need coverage in case of emergency.

Short term plans do not have to cap patient out of pocket costs like ACA compliant plans. Because of this they can be purchased with very high deductibles and lower premiums. 

However, there are limitations with this kind of coverage. Short term plans do NOT cover preventative care, pre-existing conditions, or ongoing prescriptions. They don’t cover labor and delivery either.

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These plans were introduced in 1996, pre-ACA. 

• They were originally created for those who were coming off of employer insurance, so they wouldn't have a gap in coverage. 
• The ACA didn’t include short term plans, which is why pre-existing conditions and preventative care aren’t fully covered.

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ACA plans are required to provide certain levels of coverage called minimum essential coverage. Short term health plans are NOT required to meet the same standards. Short term plans aren’t connected to tax credits or subsidies you see on the Marketplace. 

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Some insurance companies that offer short term plans offer discounts on premiums based on the consumers health. 

• Utilizing this sort of discount requires the consumer to fill out a medical questionnaire that must be answered honestly. 
• If you have an incident that contradicts what was answered on the questionnaire, you could lose coverage. 
• Additionally, if you have an incident that requires ongoing care, you could be denied renewability. 

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Pros of short term health insurance

• Designed to fill short-term gaps in coverage should you need it
• You can cancel whenever you’d like without penalties
• You can typically choose a plan that covers you up to a year if needed
• Many different plan designs are available depending on insurance carrier

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Cons of short term health insurance

• Significantly higher deductibles than traditional health plans with other possible unforeseen costs
• No coverage for pre-existing conditions and limited coverage for most services
• A medical questionnaire may be required to be approved for coverage
• Coverage is not mandated or standard so plans vary greatly in covered services and costs with very little government oversight.

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Short term health insurance may not be ideal for long periods of time. If you have lost your job, are transitioning off your parents’ insurance upon turning 26, or have missed open enrollment, short term plans may be your best option.

For comprehensive coverage and benefits, make sure you enroll in a traditional health plan. This is employer provided health coverage, or individually purchased plans through the Marketplace. 

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