6 Unexpected Benefits of Short Term Health Insurance
Short term health insurance plans serve the coverage needs of many Americans, but far too often, they’re blown off as so-called “junk plans.” Sure, this type of insurance isn’t exactly the same as a traditional major medical plan, but that doesn’t mean that it’s not a good option, especially if you’re in good health and just want something in place for accidents or unexpected trips to the ER. In fact, the more you get to know short term health insurance, the more you might find that it’s just the kind of coverage you’ve been looking for. Here are six surprising benefits that might change the way you think about temporary health insurance.
#1 – It’s the “Choose Your Own Adventure” of Health Insurance
Major medical plans (that comply with Obamacare regulations) are required to cover 10 essential health benefits. Any ACA-compliant plan that you buy must offer prescription coverage, maternity care, mental health services and more – whether you want or need those benefits or not. Most plans come with standardized sets of coverage, which make them a good deal for those who can afford these plans. But hefty benefits also mean big prices, and you can’t customize them as much as you can with short term options.
Now, short term health insurance isn’t a pick-and-choose buffet, but it does give you more flexibility to opt out of benefits that you don’t plan to use. If you don’t ever visit the pharmacy, then you can save money by choosing a temporary health plan that doesn’t include prescription drug coverage.
Likewise, you’ll find plans with very basic benefits and even some offerings that include limited coverage for pre-existing conditions. (IHC Group is one company offering coverage for people with health problems, a first for short term carriers.) Maybe “choose your own adventure” is a generous way to describe these plans, but there’s no denying that temporary coverage gives you greater flexibility and control over your coverage.
#2 – They’re Not So “Short Term” Anymore
ACA health plans must allow you the option to renew your coverage year after year. There’s peace of mind in knowing that your health insurance coverage isn’t going anywhere anytime soon. But renewability contributes to the high premiums associated with Obamacare coverage.
In 2017, short term plans were capped at three months at the federal level. The Trump administration rolled back those regulations and allowed plans to last for up to just under a year, which took effect in October. Plus, the new regulations allow short term health plans to be renewable for up to 36 months. If you like the idea of being able to keep the same plan for three years, you can pay for that privilege.
Note that longer short term plans are estimated to cost 35 to 50 percent more than the ones that last for three months or less. If you don’t care about renewability, you can save money by opting for a cheaper, nonrenewable short term insurance plan or one that doesn’t last as long.
#3 – You’re in Healthy Company (for the Most Part)
Short term health plans accept only customers who meet their health requirements, and they don’t usually provide any coverage for injuries or illnesses that began before your policy took effect. These restrictions mean that temporary health plans generally have healthier risk pools than major medical plans. In other words, the people buying them have fewer medical problems and need less care.
Why does that matter? Healthier risk pools lead to lower premiums. Short term health plans cost about 54 percent less than ACA plans, which must accept everyone regardless of health status (and can’t charge people with pre-existing conditions more for coverage). According to some estimates, even if the only difference between temporary plans and ACA plans were that the temporary ones excluded pre-existing conditions, short term plans would still cost 38 percent less than their major medical counterparts.
#4 – You Can Stick to Your Guns (and Your Conscience)
When you pay your health insurance premiums, the money goes into the insurance company’s pool of funds. The money isn’t set aside specifically for you. It could be used to pay any customer’s claims. You might be someone who’s avoided purchasing health insurance out of a concern that your premiums could be used to fund treatments to which you’re morally opposed, such as drug rehab, birth control pills or abortion.
Many short term insurance plans cover only basic care, so they don’t include the type of services to which you might object. Because of this, buying a limited-duration health plan can be a good way to meet your need for insurance without compromising your values.
Now, we don’t want to oversell the morality of a health plan here. The truth is you won’t know how your premiums are being used other than for your own claims. Your short term carrier could cover abortion services, for instance. But since many short term plans exclude maternity care and preventive services specifically, you have a better chance of not funding some services (via your premiums) with these plans than you do with major medical.
#5 – Short Term Plans Let You Go Where You Want to Go
Many ACA insurance plans attempt to limit premium costs by restricting their provider networks. Some offer coverage only for providers within one hospital system, and they pay nothing for out-of-network care.
On the other hand, most short term health plans allow you to see nearly any provider that takes the insurance plan. This gives you the freedom to use the doctors and hospitals that you like most. It also allows you to travel around the country without worrying about what you’ll do if you get sick or hurt on your trip. If something comes up, you can seek treatment from a nearby provider and then get back to enjoying your vacation as soon as possible.
#6 – You’ll Avoid the Limbo of ACA Repeal
The Trump administration didn’t manage to repeal the ACA in 2018, but that doesn’t mean that Obamacare opponents haven’t entirely given up on the idea. Repeal and replace could end up back on the agenda in 2019. Since the Democrats gained control of the House in the 2018 midterm elections, a Republican bill to get rid of the ACA has a negative chance of passing, but anything’s possible.
If you’re tired of feeling that the fate of your healthcare coverage is constantly hanging in the balance, a short term health plan can offer you a comforting reprieve. Even if the ACA were to go away tomorrow, with a temporary plan, you’d still be covered.
Get Covered in the Short Term
With a temporary plan, you can get coverage for the weeks, months or years when you don’t have a traditional plan and then drop it once you find a more permanent solution. You can cancel a short term plan at any time, so you won’t have to worry about paying two premiums at once if you end up getting other coverage sooner than you expected. In fact, some companies will refund your entire premium if you cancel an unused policy within 10 days of signing up. And buying a plan that offers a trial period can be a great option for filling very short gaps in coverage.
Health insurance is vitally important. If you’re facing a time in life when you can’t get major medical insurance for one reason or another, don’t be tempted to skip out on coverage altogether. A medical crisis during that time could quickly burden you with thousands in unexpected medical bills. Short term health insurance was designed to provide protection during coverage gaps.