How Short Term Health Insurance Stacks Up Against ACA Regulations
Short term health insurance plans can be a great way to get the protection you need while you’re in transition. While temporary medical coverage is meant to fill a gap between the times that you can get a regular healthcare policy, more individuals are signing up for this type of coverage as an affordable alternative to major policies that comply with the Affordable Care Act (ACA). Whether you’re in between jobs, you’ve missed the open enrollment period for major medical, or you have to wait a few weeks for your regular coverage to kick in, a short term insurance policy may be able to reduce the unexpected expenses associated with hospitalization or emergency medical care.
If you’re thinking about getting a temporary health plan, though, you need to know that it’s not as comprehensive as ACA-compliant plans. Major medical policies sold on and off the exchanges must cover 10 essential health benefits and comply with a host of federal regulations. These regulations don’t apply to temporary coverage. However, some short term policies include more benefits than others. To determine if a short term policy will work for you, consider how temporary health plans stack up against insurance policies that meet the minimum requirements of the Affordable Care Act.
Perhaps one of the biggest differences between regular health insurance and limited duration medical plans has to do with pre-existing conditions. According to regulations under the ACA, all on- and off-marketplace major medical plans have to provide you with treatment for pre-existing medical conditions. These are medical conditions for which you may have received treatment before you bought insurance. Not only that, your insurance provider can’t deny you coverage or raise your rates if you develop a medical problem while you’re covered.
Unlike major medical plans, short term policies use medical underwriting to weed out riskier customers. Insurers can deny you for a short term policy if you have any health problems or pre-existing conditions. If you develop an illness while you’re enrolled in a policy, you may be denied temporary coverage in the future. Even if you are approved for limited duration coverage, any treatments for your pre-existing condition won’t be covered. You could also have to pay higher premiums just to obtain coverage.
It should be noted that one insurer, IHC Group, does offer a short term health plan for people with pre-existing conditions. It covers up to $25,000 worth of care related to a person’s medical problem. But IHC Group, like all short term providers, will likely use medical underwriting to approve or deny your application, so there’s no guarantee that you’ll get a policy. If you have a chronic problem, like diabetes or heart disease, then major medical plans will be a better option for you.
Emergency Care and Hospitalization
ACA plans must provide coverage for outpatient care services, emergency room visits and hospitalization. This can include overnight stays in the hospital and surgery. You may have to try to get an appointment with your primary care physician or an approved urgent care facility for situations that are non-life-threatening. Emergency room visits are covered for injuries or illnesses that require immediate treatment.
Short term medical insurance covers emergency care and hospitalization for covered injuries and illnesses. While many limited duration health plans claim to provide coverage for surgeries, it is typically limited to unexpected or emergency surgeries. Review the types of surgery that would be covered with your short term policy. Another factor to consider is that while temporary health plans cover injuries from accidents, they typically exclude coverage for injuries due to extreme activities, including sports.
Mental Health and Substance Abuse
Major medical plans must provide adequate coverage for mental health and substance abuse treatments, both inpatient and outpatient. While there might be certain guidelines, such as referral from your primary care physician, all comprehensive health plans must include this coverage under Obamacare.
Short term plans may or may not cover mental health or substance abuse. If they do cover these services, there could be limitations, especially when it comes to total benefit payouts. Additionally, payments may be refused if the mental health problem you’re dealing with is considered a chronic or pre-existing condition.
Prescription drug coverage is guaranteed under major medical policies today. This includes temporary medications like antibiotics as well as long-term drugs, such as antidepressants. Birth control must also be covered under regular medical insurance plans. The degree to which prescriptions are covered does still vary by plan, but there must be some kind of coverage with major medical policies.
Kaiser Family Foundation reviewed short term health plans from major cities in the U.S. and found that only about 30 percent of limited duration policies offered this coverage. Temporary policies don’t have to cover prescriptions, but some do. The cost of medication for pre-existing conditions or other unapproved services is not included. Temporary health plans do, however, typically cover the cost of any medications that you may be given while you’re in the hospital. And many short term plans include prescription discount cards that you can use to save on medications.
Preventive Care and Wellness Benefits
Not only does major medical insurance have to cover care for chronic conditions, these policies must also cover preventive care and wellness benefits. These can include a vast array of preventive screenings and laboratory services, along with well-child visits and regular vaccines for children and adults.
For the most part, short term healthcare only provides benefits for unexpected events and emergency situations. This means that preventive and wellness care is generally not covered in this type of policy. These plans also don’t cover maternity care, including labor and delivery for routine births.
When it comes to premiums, short term policies can be dramatically cheaper than major medical plans. But the benefits provided are substantially less than the more comprehensive coverage guaranteed under the Affordable Care Act. Your copays and deductibles may be higher with a short term policy, and yearly and lifetime caps can make these plans less economically sustainable, especially if you have a chronic health problem. If you just need short term coverage, though, temporary policies make sense. Just do your research diligently to make sure you’re getting the best deal possible.