You're probably reading this because you're concerned about your Short Term insurance costs. A little digging helped you discover Short Term premiums are generally less expensive than the premiums you've looked at for a major medical Affordable Care Act (ACA) health plan. Now you're more curious about Short Term plans. There's no doubt one of the most attractive qualities of Short Term is that up front "sticker" price.
But it's time to kick the tires, pop the hood and take a closer look. To make the choice as to whether Short Term health insurance, also called Term insurance or Temporary health insurance, is the right choice for you and your family right now, you need to consider some cost issues:
Note: Plan design and availability vary by state. Find out what's available where you live. View Plans
Simply put, your premium is the amount you pay for your health coverage for a specific period of time, usually paid monthly.
The good news–generally speaking, Short Term premiums are much less than premiums you would pay for an Affordable Care Act (ACA) health insurance plan.
But (you knew there was a "but" coming, didn't you?) simply comparing a Short Term premium to that of an ACA health plan won't give you an accurate answer of how much your Short Term medical plan is going to cost. There's a little more to it.
|Potential ACA tax penalty||
The first and last thing to remember here is this: Short Term plans do not meet the minimum essential coverage requirements under the ACA, also known as Obamacare. They are designed solely to provide temporary insurance during unexpected coverage gaps. Choosing a Short Term plan may result in your receiving a tax penalty. That's a cost you need to plan for if you want to choose temporary health insurance over an ACA plan.
Remember, too, you may be giving up on help in paying for your health insurance by choosing a Short Term plan. If you get an ACA health plan, you may be eligible for help paying for your insurance in the form of:
In contrast, Short Term plans do not qualify for any credits or subsidies.
The government may not help you cut your costs on Temporary medical insurance, but by using these tips, you can take action to find the best Short Term health insurance rates for your situation and cut your costs:
Possible exemptions to the ACA tax penalty include:
These and other circumstances may qualify you for an exemption. Seek out a qualified tax advisor if you think you might qualify for an exemption.
Once you have your Short Term plan in place, you need to understand four key concepts to keep an eye on your health care costs:
So, generally speaking, when you hit your deductible, your insurance plan starts paying toward your covered expenses. Then when you hit your out-of-pocket maximum, you stop paying anything toward your covered expenses. Insurance pays 100% of them after that point.
Note: Some Short Term insurance plans do not pay any out-of-network benefits, meaning in those cases, you would be responsible for any medical expenses from care provided by a doctor or facility not in the plan's network. Also, some plans do not have an out-of-pocket maximum. With those plans, you would keep paying your coinsurance rate for any covered medical expenses. Check your plan brochure for details and understand your payment responsibilities before you buy.
As you are shopping, remember that Short Term plans and ACA plans are not comparable products.
ACA health plans are guaranteed issue, meaning you cannot be denied coverage based on preexisting conditions. Also, ACA plans are required to cover certain minimum essential health benefits. Also, generally speaking, as long as you pay the premium, you can keep your ACA health plan.
Short Term health insurance is not required to cover the same benefits.1 Plans can vary in what they cover. Also, they typically do not cover preexisting medical conditions. A series of medical questions determines your eligibility for these plans. Also, Short Term health plans are restricted to terms of coverage under 3 months.
So, while you may save money choosing Short Term, be sure you are paying for the right coverage for you before you buy.
1 This applies only if you choose Silver plan on the federal Health Insurance Marketplace or your state’s marketplace.
1 Lump sum savings apply only to the medical plan premium. Savings do not apply to premiums for optional benefits added to the medical plan.
2 Check your state’s plan brochure for more information.
6 Premiums do not count toward deductibles. Usually copays do not count toward deductibles. Check your plan brochure for more information.
7 Short term health insurance is medically underwritten and does not cover preexisting conditions. This coverage is not required to comply with certain federal market requirements for health insurance, principally those contained in the Affordable Care Act. Be sure to check your policy carefully to make sure you are aware of any exclusions or limitations regarding coverage of preexisting conditions or health benefits (such as hospitalization, emergency services, maternity care, preventive care, prescription drugs, and mental health and substance use disorder services). Your policy might also have lifetime and/or annual dollar limits on health benefits. If this coverage expires or you lose eligibility for this coverage, you might have to wait until an open enrollment period to get other health insurance coverage. This coverage is not “minimum essential coverage.”