Short Term Health Insurance
Short-term health insurance plans provide coverage for individuals who face a lapse in their health insurance coverage. They’re helpful to those who have lost a job, aren’t eligible for a group insurance plan, and those who don’t qualify for a special enrollment period for an Affordable Care Act (ACA) plan.
A short-term health insurance plan (STM) will offer health benefits at an affordable price. Many of these plans have high deductibles and copays and limited maximum benefits, but they are beneficial to have in place in case something catastrophic happens.
What Is Short Term Health Insurance?
Short-term health insurance plans in Austin, TX, offer temporary coverage for individuals who have a lapse in coverage. Short-term policies range in duration from a few months up to one year. In most states, including Texas, you can renew an STM for up to three years. However, some states have shorter durations.
You can enroll in a short-term health insurance plan anytime during the year. They are not susceptible to enrollment periods, nor do you have to have a qualifying life event to enroll. This is different than ACA plans, which only allow you to enroll if you have a qualifying event or during their open enrollment period.
The ACA does not regulate STM plans, so they are not required to provide the minimum essential benefits as ACA plans do. Essential benefits include outpatient and inpatient hospital care, prescription drug coverage, and mental health services. Short-term health plans are also not required to include coverage for pre-existing conditions. In essence, short-term plans are ideal for healthy individuals.
There are a few groups of people who would benefit from a short-term health insurance plan in Texas:
● Individuals between jobs or currently on a probationary period
● Individuals who recently graduated college
● Individuals who are aging out of their parent’s plan
● Individuals leaving the welfare program
● Individuals who missed the ACA open enrollment period
● Individuals who are leaving military service
● Individuals who are retired but are not yet eligible for Medicare
Who Is Eligible for Short Term Health Insurance in Texas?
Short-term health plans are not required to cover pre-existing conditions. When you apply for an STM plan, you will fill out a health questionnaire and disclose any pre-existing conditions. The insurance company may deny your application entirely or note your condition and limit coverage for it.
Most insurance companies will deny coverage if you fall into one of these categories:
● Individuals who are pregnant
● Individuals who are covered under another insurance policy
● Men who weigh more than 300 pounds
● Women who weigh more than 250 pounds
● Individuals with HIV or AIDS
● Individuals who qualify for Medicaid
● Individuals who are eligible for Medicare
● Individuals who are not U.S. citizens
There are 11 states that do not offer STM plans. Some of these states have banned them, while others have made them so restrictive that insurance companies do not want to provide them. The 11 states that don’t offer short-term health plans are Vermont, Rhode Island, New York, New Mexico, New Jersey, Massachusetts, Maine, Hawaii, Connecticut, Colorado, and California.
What Does Short Term Health Insurance Cover?
As with any other insurance plan, the benefits found in a short-term health plan will depend on the specific policy. In most cases, an STM plan will cover an emergency hospital visit. They also provide coverage for some prescriptions and doctor visits, as long as neither is related to a pre-existing condition.
Waiting periods are common in STM plans. During the waiting period, the policy will not cover certain conditions. If your current STM plan ends and you choose a new one, you will have a new waiting period. Also, any conditions you developed during the first plan may not be covered in the second. This does not apply if you renew your current plan.
Short-term plans also set a maximum amount they will pay during the plan’s term. Once that limit is reached, the insured will be responsible for paying for all costs out-of-pocket.
If there is a plan you are considering, be sure to read the policy summary to find out the specific benefits of that plan, as well as any limitations and restrictions.
How Do You Choose a Short Term Health Insurance Plan?
If you’ve decided that a short-term insurance plan is a good fit for you, there are a few factors to consider when choosing a policy.
Deductible
Find out how much the deductible is for the policy. There are some policies that have a $1000 deductible and others that have one as high as $10,000. That’s quite a difference to consider. Plans with higher deductibles may have lower monthly premiums, but you should consider how much you can afford to pay out-of-pocket. Your plan will not offer any coverage until the deductible has been met. Also, keep in mind that there is no cap to your out-of-pocket expenses.
Copays
STM policies typically have copays for visits to your doctor. Like the deductibles, some plans have higher copays than others.
Coverage Limits
Every short-term health insurance plan has a coverage limit. These can range from several hundred thousand dollars to several million dollars.
Prescription Drug Coverage
If you take prescription medications regularly, make sure you find a plan that offers prescription drug coverage as part of its benefits. (Be sure to look up the specific medications since some policies have limited prescription coverage.) If you can’t find an STM plan with prescription drug coverage, you can find discounts with programs like GoodRx.
Provider Networks
Some short-term plans require you to see providers within their network. For example, health Maintenance Organization (HMO) plans require you to see a provider within the plan’s network. Otherwise, you will have no coverage for services. Preferred Provider Organizationds (PPOs) have more extensive networks and offer some benefits outside of the network area. Be sure to know which type of plan you choose and find a provider within that network.
Renewability
If you know you will need to renew your plan, be sure the renewability option is offered in your policy. As we mentioned earlier, if you have to find a new plan, any conditions you developed while under your existing coverage will be considered pre-existing conditions in the next plan.
How Much Does a Short Term Health Plan Cost?
Monthly premiums for a short-term plan in Austin, TX, will be less than an ACA or other major medical plan. While the cost will vary based on the specific plan, there are many high-deductible plans that offer premiums as low as $60 per month.
The personal factors that affect your monthly premium include:
● Location
● Age
● Gender
● Occupation
● Body Mass Index (BMI)
● Tobacco use
● Medical history
COBRA versus Short Term Health Insurance
If you lose coverage in your employer’s group health plan, you should compare an STM plan to COBRA enrollment. The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires insurers to allow an individual to continue their coverage in an employer-sponsored health plan. Therefore, an individual who chooses to use COBRA will be able to keep the same coverage – including medical, dental, and vision benefits – as long as they pay the monthly premium. The premium will also include an administrative fee, typically an extra 2%.
COBRA will be more expensive than a short-term plan but often has better benefits. If you are unhealthy or have health conditions, you should consider staying with your employer’s plan through COBRA. But, of course, this is not affordable for everyone.
ACA versus Short Term Health Insurance
There are several differences between ACA plans and STM plans. You should understand their differences before choosing which is the better option for you.
Essential Benefits
The ACA has recognized ten types of essential benefits that all ACA health plans must provide:
● Hospitalization
● Emergency services
● Ambulatory services
● Maternity and newborn care
● Prescription drugs
● Lab tests
● Mental health services and substance abuse treatment
● Preventive care
● Pediatric dental and vision care
● Rehabilitation services
Short-term policies do not have to offer these essential health benefits. Most often, the ones not included are preventive care, maternity and newborn care, mental health services, and prescription coverage.
Pre-Existing Conditions
ACA plans cannot exclude coverage for pre-existing conditions, nor can they deny coverage based on current or past health status. You will not need to pass medical underwriting to enroll in an ACA plan.
STM plans, however, do require each applicant to undergo medical underwriting. Therefore, you will answer a series of health questions prior when submitting your application. Based on your answers, the insurance company can deny enrollment or limit your coverage based on your responses to the health questionnaire.
Another common practice with STM plans is post-claim underwriting. They might do this in addition to the initial underwriting, or only perform it when claims are submitted.
Once a claim is filed, the insurer can review medical records to determine if the claim is connected to a pre-existing condition. If it is, they will deny coverage. Also, if they find discrepancies in the health history you provided in the initial application and the records they obtained later, they can deny the claim based on those false statements – even if the current claim has nothing to do with the pre-existing condition.
Premiums
One significant benefit to short-term health insurance in Austin, TX, is that the monthly premiums are affordable. ACA plans have higher premiums since they offer more benefits.
Enrollment Periods
You can enroll in a short-term medical plan at any time. However, ACA plans are only available during the open enrollment period – November 1 through January 15. You can also enroll in an ACA plan at any time if you qualify for a special enrollment period.
Certain life events will qualify you for a special enrollment period. These events include marriage, having a child or adopting a child, moving, or losing your current coverage.
Conclusion
Short-term health insurance plans are helpful in many instances. For example, a common situation we find our clients in is when a spouse leaves their employer’s group health plan to transition to Medicare. If they had dependents on their insurance, those dependents would be left without coverage. This is a prime example of when a short-term plan would be a great option.
You don’t have to weigh all of your options alone. We know there is a lot to consider when choosing an insurance plan, and we can help you through that process. Our licensed insurance agents will first understand your unique situation and then offer solutions tailored just for you.
