Short-term health insurance plans are a low-cost insurance plan with a very short policy term period of maximum 12 months. On the expiry of this period you need to renew the plan. People buy these plans to bridge the gap between health insurance plans while they lose existing coverage or they are between jobs. People usually buy short term insurance plans to avoid paying high premiums on long term insurance plans.
Circumstances under which you need a short-term health insurance plan:
- To bridge the gap in coverage due to job change – If you are a person who has got a new job but due to some difficulties you could not join your new job immediately, short-term plans can be affordable, unlike long-term plans where you need to commit for a long period.
- To cover you in case you do not qualify for a special enrolment period– if you want coverage during your emergencies and you have to still wait for your open enrolment period to begin, you can choose a short-term plan to solve your problem.
- You cannot get an ACA complaint plan- It is always better to have a temporary short-term plan than not being covered at all. Moreover, short-term plans are more affordable than an ACA compliant plan.
However, one needs to understand that the short-term plans might look attractive because of their lower premiums but there are various underlying problems associated with its low cost and that they do not cover many benefits. According to the Kaiser Family Foundation research, 43% of short-term plans fail to cover mental health problem conditions, 63% refuse to cover substance abuse treatment, 100% of the plans do not give coverage for maternity-related expenses, 71% avoid to cover outpatient prescription drugs. Such limitations need to be carefully considered while buying a short-term health insurance plan.
Problems associated with buying Short-Term Health Insurance Plan:
The short-term health insurance plans might look attractive because of their low cost, but there are various problems associated with these short-term insurance plans which are as follows:-
- Intruding and tedious: In order to buy a short-term plan, you have to inform the insurance companies a lot in detail about your health conditions and treatments done earlier. You need to answer all their queries related to your health like, whether you are already diagnosed with diabetes, cancer, HIV testing, health issues resulting from the intake of drugs or alcohol and whether you have undergone any related treatments. There can be even queries about your height, weight, blood test results, other diagnostic records. So whether you like it or not you have to go through all of these hassles before buying a short-term health plan.
- No coverage for pre-existing health conditions: As you need to report all your health conditions for buying a short-term health plan, so insurance companies use this information to deny coverage of many medical expenses related to pre-existing health problems. Any treatments for these pre-existing health conditions are also not covered. Even the present hospitalization benefits are also not paid if there has been a prior diagnosis of the disease for which the patient is hospitalized now.
- High out-of-pocket essential medical expense: Many essential medical expenses do not get coverage under this plan. Denials include important medical expenses like maternity expenses, disability benefits, medicinal costs of outpatients. Thus, in order to meet these expenses, you have to pay these expenses out of your own pockets. Some denials are there for which you need to go through the rules of the policy properly before buying the plan. These may include expenses like treatment expenses for injuries resulting from suicide, any illegal activities, any recreational sports. There are short-term plans for which High deductibles are charged and the cost is shared between the insured and insurer in case the short – term plan covers the benefits. The rest of the cost is left to be born by the insured alone. The part of the cost that the insurance company pays is so less at times that the insured has to pay a huge amount for the medical expenses (even if they are not pre-existing conditions) out of their own pocket.
- Premiums are higher than the benefits provided: As the ACA rules (requiring insurance companies to pay 80% of the premiums for medical claims and improvement of health conditions of the insured) do not apply on short-term plans, so the customers get very less amount from the insurance companies to meet their medical expense. The coverage these plans offer is so less that these plans turn to be ultimately expensive for the customers.
- Gender biased premium rates: The same plan may be differently charged for a man, woman and old people. For example, for the same short-term plan of Rs. 30,000, the insurer may charge a monthly premium of Rs.80 from a man, Rs.100 from a woman, Rs.130 from an old man and Rs.120 from an old woman.
- A limited selection of doctors makes your medical care all the more difficult.
The 10 essential health benefits are not covered under short-term health insurance plans:
- Outpatient care
- Prescription drugs
- Emergency services
- Laboratory services
- Chronic disease and wellness services
- Inpatient Hospitalization care
- Mental health conditions
- Rehabilitation services
- Maternity and newborn care
- Pediatric services
Reasons why long-term plans are preferred over short-term health insurance plans :
- Short-term health insurance plans do not cover long- term needs of over I year.
- Short-term plans are strictly not renewable.
- Short-term plans do not cover pre-existing health conditions
- Maternity coverage one very important coverage is not covered under a short-term plan.
Ways to protect yourself from the adverse effects of short-term health insurance plans:
- Try to buy only an ACA plan if possible- A comprehensive coverage from buying an ACA plan can save you from financial losses.
- Try to make special enrolment benefit work- Do not forget that you have a special enrolment period to help you buy an ACA plan in case your open enrolment time has not begun. Short-term plans are not your last resort.
- If you have no options left, then buy the most generous short-term health insurance plan.
Short-term health insurance plans are not very economical and pose a high risk of non- coverage of major medical expenses. Presently, these plans are not offered by 11 states and the rest have posed restrictions on these plans. So you need to look into the pros and cons before applying for a short term plan.