Short Term Medical Insurance
What are the Pros and Cons of Short Term Medical Coverage?
No coverage for pre‐existing conditions
Any condition for which medical advise, diagnosis, care or treatment was recommended or received before the insurance becomes effective is usually excluded in a short term medical policy. Anthem BCBS Enhanced Choice is one exception, but the monthly premiums are usually higher than other short term options.
Underwritten based on medical history
There is no guarantee of approval for a short term policy. The medical questions tend to screen for major or chronic conditions (cancer, heart, stroke, diabetes, organ disorders, AIDS, etc). See an example of the questions asked by United Healthcare, Anthem and National General here.
No Coverage for Preventive Care or other Essential Health Benefits
You should carefully examine exactly what is covered under a short term policy, in particular reviewing the Exclusions section. These policies are not subject to the “Essential Health Benefits” requirements of the Affordable Care Act and can exclude things like maternity, mental health, preventive care, prescriptions and more. A sample list of exclusions is available here.
Coverage valid for 12 month intervals (or less! or more!)
Things get a little messy here. Depending on the State you live in and what insurance companies are offering, short term insurance may be available for 6 months, 12 months or 1 day short of 3 years. For Indiana residents, the smart move if you’re purchasing short term coverage is often to have the policy expire/renew on December 31st, to coincide with the Marketplace/Affordable Care Act Open Enrollment Period (which runs from Nov 1st to Dec 15th every year, with coverage beginning January 1st).
Does not count as Minimum Essential Coverage
Short term policies do not meet the standards for Minimum Essential Coverage (MEC) outlined in the Affordable Care Act. The requirement for all Americans to have MEC is still in place but the penalty for not having MEC has been reduced to $0 since 2019.
So why would someone want to enroll in a short term policy?
Significantly lower monthly premiums
40 year old male, $5,000 deductible is around $170/month. Premiums can further be lowered by prepaying for the entire policy period in advance, and by increasing the deductible.
Typically includes a PPO network
Use of a PPO network varies from policy to policy, but many short term plans include a PPO network, so the policyholder benefits from network pricing agreements.
Comprehensive List of Covered Services
Policyholders are not limited to only having coverage due to an accident or specific illness. Unlike indemnity type plans (Hospitalization, Critical Illness, Accident, Cancer, etc) claims are paid on an incurred basis instead of only paying a specific dollar amount per admission or based on a specific diagnosis.
No enrollment limitations (sign up any time of the year)
Marketplace enrollments are limited to the November 1st ‐ December 15th open enrollment period and strictly enforced special enrollment events. Short term policies are available year round and coverage can start the next day. Note: a COVID Special Enrollment Period is available for Marketplace until August 15, 2021.
