Many consumers these days are applying for short-term health insurance plans in the healthcare marketplace instead of opting for longer term coverage that meets the requirements of the Affordable Care Act. Many research studies have reported that the number of applicants for short term health insurance plans has been going up for the past few years.
However, you need to carefully go through the pros and cons of these plans before you choose to apply for one. Here is everything you want to know about these health insurance plans.
The first thing you need to know is that these plans are specifically designed for filling any temporary coverage gaps for people in transition such as people between jobs, early retirees as well as recent college graduates among others. These insurance policies are available for a period of one to eleven months in most states whereas some states allow one to buy insurance policies for 4 to 6 months. However, you shouldn’t think of these plans as condensed versions of the standard health insurance plans. You may still have to pay a penalty even if you have short term health insurance for most of year, under the Affordable Care Act.
It is important for you to know that these short-term plans are limited in their coverage and these don’t qualify under the Affordable Care Act. The insurance policies usually cover only major health crisis. Under these plans, insurers are free to cap the amount of benefits. They also have the option to refuse to renew the coverage once the policy period ends. Also, the insurers are under no obligation to offer you this plan if you have a pre-existing health conditions whereas they can not deny health insurance for pre-existing conditions under a permanent health insurance policy.
One of the benefits of these plans is that these tend to have lower premium as compared to the standard insurance plans but these also come with fewer benefits. Overall, these tend to be pricey when one takes into account the deductible. These policies usually do not cover maternity leave and prescription drugs are also not covered under these insurance plans.
These plans usually appeal to people who want insurance coverage for catastrophes but they are willing to overlook various benefits in favor of a lower premium. It is important for people to understand that these plans are not meant to be a substitute for permanent health insurance coverage. These plans provide coverage gap for people who missed the open enrollment deadline and need some form of health insurance coverage until they can enroll in the next open enrollment period.
Most of these plans take effect within 24 hours of the application and usually, these plans do not have a preferred health care provider requirement. In simple terms, buyers of these plans can be covered for visits to any healthcare professional or hospital in the country.
Overall, these plans are great for people who want some form of coverage during the gap while they get permanent health insurance and therefore, these should not be seen as a substitute for permanent health insurance coverage.