What is Short Term Health Insurance?

September 9, 2020 13:40 newlambertagency

A short term health insurance plan is known to offer major medical type benefits in the case of unexpected accidents and illnesses. They’re also called as short-term medical insurance, temporary health insurance, short-term care insurance, short-term health plans, or STM health plans.

The plan lasts up to 3 years and both individuals and families can enroll in temporary medical insurance plans. In terms of benefits, most short-term plans offer some coverage for inpatient and emergency care, surgery, labs, imaging, and a limited number of outpatient office visits.

They generally don’t cover pre-existing conditions and your application for such a plan can be denied based on your medical history.

Let’s look at some important benefits of short term health plans:

  1. Short term medical plans offer broad networks and/or allow you to go to the hospital or provider of your choice. This means you don’t have to change doctors.
  2. You can apply at any time as these plans have no open enrollment period restrictions.
  3. They’re available with limited waiting periods so in many cases, you can use your coverage as early as the next day.
  4. You’ll be notified of your approved application within minutes.

Who should go for this plan?

If you do not have an ACA or employer-sponsored health insurance plan, a short term health insurance plan could be a viable option for you. It efficiently bridges the gap for people moving from full-time employment to self-employment, or other scenarios where the future is unpredictable and finances are tight.

And if you’re in overall good health and don’t have chronic conditions or complex medical needs, then this plan is the best fit for you.

Also, if you’ve recently retired but are still too young for Medicare, a short term health plan is the right solution. However, the downside to STM health plans is that they are not guaranteed renewable. Although the premiums are low if one were to get sick with significant claims the company will decline to renew that policy. This is an inherent risk with STM plans. Therefore, for people with chronic and complex conditions, ACA plans would be much more suitable.

Thinking of buying a short-term health plan? Here are some things to keep in mind:

  1. Read the fine print of what the plan covers and what it doesn’t cover and see if a COBRA plan through your former employer or coverage through your spouse’s employer makes more sense for your situation.
  2. Understand how much you’ll pay out of pocket, how much are the deductible, the percentage of covered medical expenses after the deductible, and the maximum out of the pocket amount you will have to pay.
  3. Check the dollar cap on coverage – the lifetime benefits maximum and make sure the plan’s network includes your doctors and hospitals.
  4. And please keep in mind that once you enroll in a short term health insurance plan, you will lose eligibility for COBRA after the short-term plan expires.