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Short-Term Health Insurance: What Is and Isn't Covered

Learn about short-term health insurance plans, including what is covered, state-law limits, how much they cost, and where to find them.

You may come across short term health plans for many reasons.

Maybe your employer doesn’t offer health insurance. When you looked at marketplace health insurance plans, you were shocked by the prices.

Or you may have missed open enrollment. After it was over, you discovered short-term health insurance is one of the options you still have access to.

No matter why you’ve found short-term health insurance, it’s essential to understand what it is and how it works.

Short-term health insurance isn’t like your standard health insurance plan.

Here’s what you need to know.

What is Short-Term Health Insurance?

Short-term health insurance is what it sounds like. It’s health insurance that covers you for a short period.

In theory, it often covers you for 30 days to a few months. In some cases, it can cover you for up to almost 12 months.

How it differs from standard health coverage

Short-term health insurance is not standard health insurance coverage.

It has restrictions, covers less, and has other features you should be aware of.

Standard health insurance found at your employer or through a marketplace usually meets the Affordable Care Act’s (ACA’s) minimum essential coverage requirement.

Short-term health insurance doesn’t meet these requirements.

That means:

You won’t have the same type of experience you would with a standard health insurance plan.

Additionally, you aren’t guaranteed to get approved for a short-term plan.

These plans may be medically underwritten. This means they check your medical history before approving or denying you.

If a provider sees you have a pre-existing condition they don’t like, they may deny you.

These plans do not qualify for premium tax credits as the Affordable Care Act plans might.

Here are a few other details on some key differences.

What is covered

Short-term health insurance isn’t meant to cover the same things traditional health insurance does.

Instead, it only covers limited situations.

Short-term plans focus on preventing high out-of-pocket costs from things like injuries and hospitalizations.

Each plan varies.

That said:

They don’t typically cover your standard doctor checkups, prescription drugs and pregnancy. Some plans may cover some of these situations, though.

The plans generally exclude pre-existing conditions, too. This is one of the critical requirements of the Affordable Care Act health insurance plans.

If you end up needing care from something that happened prior to your plan starting, those charges may not be covered.

For instance, a person catches COVID-19 before getting a short-term health insurance plan.

Then, they have issues from the previous COVID-19 diagnosis after they get coverage. The issues that happen after the plan starts would not likely be covered by your short-term health insurance plan.

These plans normally limit the total amount they will pay out. Once you hit the cap, the insurance quits covering any new expenses.

Short-term coverage varies based on state laws

Federal law allows short-term health insurance to last up to 364 days.

Additionally, the plans can be renewed to last a total of up to three years.

That’s good news for people that want to keep their plan.

Unfortunately, states may have laws that vary by state. These laws can be more strict and limit coverage periods.

That means you may not be able to have short term health insurance for as long as people in other states may be able to.

States that do not allow short-term health insurance plans:

  • California
  • Hawaii
  • Massachusetts
  • New Jersey
  • New York

States that limit short-term health insurance plans to six (6) months:

  • Colorado
  • Illinois

States that allow short-term health insurance plans for only three (3) months without renewals:

  • Delaware
  • District of Columbia
  • Maryland
  • New Mexico
  • Vermont
  • Washington

Consult with a health insurance agent in your state. They can help you understand what laws short-term health insurance plans may have to follow.

When you can sign up for short-term health coverage

You can sign up for a short-term health insurance plan at any time.

You aren’t limited to the open enrollment period or a special enrollment period.

How Much Does It Cost?

Short-term health insurance pricing varies dramatically depending on several factors.

Your location, age and gender factor into prices.

The type of plan you choose will affect the cost, too. High deductible plans will cost less than low deductible plans if all other factors are held equal.

You may find a short-term health insurance plan for under $100 per month. At the same time, some short-term health insurance plans cost much more.

Your plan’s price depends on your particular situation and the level of coverage you want.

Pros

Cheaper

The monthly premium on a short-term health insurance plan will usually be less expensive than standard health insurance.

Your total out-of-pocket costs for the year may be higher.

It depends on the medical costs you incur.

Can fill a short-term need

If you only need coverage between jobs or until you reach Medicare age, this could be a good fit to bridge a short gap.

Could save you money if you’re healthy

Healthy people that don’t use their coverage could save money with these types of plans.

For this to happen, they must get lucky and have no major medical costs.

It’s a gamble that could backfire.

If you have significant health issues, you may pay more than opting for traditional health insurance.

Cons

May not get renewed

Companies aren’t required to renew your policy.

Let’s suppose you’re diagnosed with cancer toward the end of a policy. The insurer doesn’t have to renew your policy. You may end up without health insurance when you need it most.

Could end up paying more for care

Short-term health insurance has lower premiums.

However, you may pay more for care depending on how your policy is structured versus a traditional health insurance plan.

This is especially true if you end up needing a lot of medical care.

Not Affordable Care Act compliant

These plans are not Affordable Care Act compliant.

They do not come with the same coverage levels or protections. They do not meet the requirements for having health insurance under the law.

When Short-Term Health Insurance Makes Sense

Short-term health insurance coverage is better than no insurance coverage at all.

It shouldn’t be viewed as a direct substitute, though.

In general, short-term health insurance makes sense when you can’t access a standard health insurance plan.

This may be because you missed open enrollment or a special enrollment period.

It could make sense in some niche cases, too. People about to go on Medicare may choose a short-term health insurance plan.

Even so, having a regular insurance plan would likely provide more protection and could be canceled when you get on Medicare.

Short-term plans may fill a gap between jobs.

In these cases, you should also strongly consider any COBRA insurance you qualify for through your old employer. COBRA policies will likely provide more coverage.

When Short-Term Health Plans Do Not Make Sense

Temporary health insurance plans normally aren’t a good idea for your primary form of insurance coverage.

It has too many exclusions and leaves you open to potentially big bills for medical expenses not covered by the plan.

That said:

It does exist for people that feel like it is a better fit for them.

Where to Find Short-Term Insurance Plans

You can find short-term health insurance in several places.

Notable short-term health insurance providers include:

  • Everest
  • UnitedHealthcare
  • Pivot Health
  • IHC Health Group
  • Life Shield

If you’d prefer to deal with someone face-to-face, look for a health insurance broker in your area.

Brokers can compare short-term health insurance plans from several companies. They help you find the best fit for your situation.

Compare coverage options

The biggest tip to find a good deal on short-term health insurance plans is getting many quotes. Compare several plan options from both the same and other health insurance providers.

Once you feel you’ve found a good plan for your situation, make sure you read it in detail. Check to make sure the providers you would use are included.

Understand what costs you will have to pay before you sign up for a policy. Make sure you can afford to pay those costs if you need to.

Ideally, you’d shop for these plans during open enrollment or a special enrollment period.

If you are, don’t forget to compare these plans to standard health insurance plans.

This could open your eyes to what is excluded under these plans. It may help you understand the costs you may have to pay yourself with a short-term health insurance plan.

Alternatives to Short-Term Health Plans

There's no way around it:

Traditional health insurance is the most common alternative to short-term health insurance plans.

You most often find traditional coverage through your employer, your state’s healthcare marketplace or Healthcare.gov.

You may find traditional insurance plans that don’t qualify for the marketplace. These non-marketplace health insurance plans do not qualify for premium tax credits.

Health-sharing plans

Finally, another non-insurance option exists.

Several groups have set up health sharing plans that share costs among their members.

These are not health insurance coverage and are not regulated. Make sure you understand them thoroughly before considering them seriously.

Summary

Having health insurance coverage is essential. Short-term health insurance plans can provide coverage for individual and family health insurance needs.

It’s also important to understand exactly what your plan covers. These plans typically cover less than a traditional ACA health plan but usually cost less, too.

Short-term plans often exclude pre-existing conditions, maternity care and other costs.

Even so, their lower premium payments may make them worth considering for specific situations.

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