What is short-term health insurance? For people without regular or long-term health insurance options, short-term plans offer convenience, affordability and better peace of mind. Also referred to as short-term health plans or STHPs, short-term coverage options allow relatively healthy people with few medical needs to obtain coverage during certain situations such as job loss. While STHPs offer a variety of benefits, they also come with a few substantial drawbacks.
Benefits of STHPs
According to online insurance company eHealth, short-term health insurance offers four major benefits to consumers: low rates, fast approval, flexible coverage terms and a safety net during emergencies. These pros apply particularly to healthy people who don’t often need to see a doctor. In March 2014, the open enrollment period for Obamacare ended, which left a lot of people without coverage for the rest of the year. STHPs allow people to get coverage until the next enrollment period begins on November 15, 2014.
How affordable are short-term health insurance plans? Plans quoted by eHealth start at less than a dollar per day in some geographic locations, but rates vary according to a person’s situation and other factors. Individual plans on the Obamacare marketplaces can cost three times this amount for basic coverage. For people with limited income to spend on health insurance, short-term plans offer a more cost-effective way to get limited coverage during certain situations.
The Downsides to Limited Coverage
Not everyone can take advantage of short-term health plans. Insurance website STHP.com points out that people with pre-existing conditions “will not be able to obtain a short term plan” if they’ve been denied coverage for those conditions in the past. Short-term insurance does not cover pre-existing conditions and may not cover other aspects of medical care such as preventative treatments. These plans are meant to be used in emergency situations by people with limited medical needs.
In addition, short-term health plans do not renew automatically according to U.S. News & World Report’s Health blog. Enrollees of these plans need to re-assess their plan options because the plans may not be guaranteed once coverage ends.
Complying with the Law
One of the biggest drawbacks to short-term health insurance is that it does not meet the requirements for minimum essential coverage under the terms of the Affordable Care Act. People who miss the deadline for open enrollment during the year may use STHPs as a “band aid” until the next enrollment period begins, but enrollees of short-term insurance plans may still be charged the non-compliant penalty fee for not having insurance.
Coverage in a Pinch
In the long run, STHPs don’t offer as many benefits as other plans and can become significantly more expensive than regular health insurance due to lifetime limits and coverage caps. Despite these objections, many health insurance experts agree that short-term health plans can provide crucial coverage during unexpected crises. For people without major medical problems who simply need an affordable way to bide time until an employee health plan begins, STHPs can fulfill this need.