What is Short Term Health Insurance?
A short term health insurance policy is simply a plan that can provide medical coverage over a short period ranging from a couple of weeks up to 364 days.
They are often considered very similar to standard health insurance policies, with the only exception being how long they last. However, there are other key differences to bear in mind so you know exactly what you’re purchasing and what level of coverage you’ll have.
Generally speaking, short term health insurance policies have lower premiums and higher excesses while offering considerably less coverage than more conventional health insurance plans.
What do Short Term Health Insurance Policies Cover?
When it comes to most insurance policies, there’s significant variation between individual policies even if they are of the same type – and that’s also true when it comes to short term health insurance policies.
The regulations in place provide insurance companies with plenty of flexibility to choose what they want and don’t want to offer in their short term healthcare policies, and they’re also free to set coverage levels and thresholds.
However, there are some restrictions. For example, things like maternity care, substance abuse, mental health treatment and outpatient prescription medication can’t be covered by these plans.
It should also be noted that it’s easier for an insurer to reject a claim filed under a short term policy than one filed under a standard healthcare plan, so filing a claim can be quite difficult and stressful unless you’ve picked a reliable and established insurer.
Is Short Term Health Insurance Available Everywhere?
Short team health insurance policies can be purchased in most States, with a few exceptions.
For example, short term plans cannot be sold in the States of California Massachusetts, Hawaii, New York and New Jersey, while a few other States have regulation in place which restrict the type of plans insurers can offer.
For instance, Delaware, Maryland, the District of Columbia, New Mexico, Washington and Vermont only allow short term health insurance plans as long as three months to be sold, with no renewals.
This compares to most other parts of the US which allow such policies to last just under a year and allow them to be renewed several times, effectively allowing policyholders to take out short term coverage for as long as a few years.
The Pros
There is significant demand for short term health insurance in the US – and that’s because they have a number of distinct benefits and can be very useful in certain circumstances.
Flexibility
With so many different plans to choose from, short term health insurance policies offer great flexibility – and their short team nature is also appreciated by many, as they still have the choice to renew their plans without having to commit to multi-year coverage from the outset.
Avoid Coverage Gaps
Purchasing short term health insurance coverage is a great way for people between jobs to temporarily bridge the gap between employer plans during this period and therefore allow them to avoid being exposed and potentially having to foot the entire medical bill should they fall ill during this period.
Affordability
Although short term health insurance plans are by no means the cheapest way to get coverage (in terms of value for money), they are cheaper than some of the alternatives, such as individual insurance policies.
This coupled with the flexibility they offer and their other benefits means they represent good value for money for many Americans.
How Much Does Short Term Health Insurance Cost?
Many short term health insurance plans cost less than $100 per month, but if you want a policy which offers good coverage, you should expect to potentially pay more than this depending on your location and medical history.
Keep in mind that while short term policies typically have substantially lower monthly premiums than standard health insurance, they can end up being much more costly in the long run as they have coverage gaps, less favorable excesses and other terms which can make them more expensive if you need to file a claim.
Is Short Term Health Insurance Right For Me?
Short term health insurance can be a wise and prudent investment for many people, but they are unsuitable for some Americans.
For example, if you have a preexisting condition which requires frequent treatment or medical attention, you should steer well clear of these plans, because the premiums you’ll be charged for the level of coverage you’re receiving will often be disproportionately high.
Also, short term coverage isn’t a good idea if you have a family or are planning on starting one in the immediate future.
Finding the Best Short Term Health Coverage For You
When purchasing any type of insurance, it pays to shop around and compare different insurers and their individual plans, as there’s plenty of variation when it comes to the value for money on offer and coverage levels.
To find the best short term health insurance plan for you, we recommend you follow our four step plan:
Consider Your Options
Short term health insurance should typically only be taken out if you have no other options available to you, as they are rarely the most cost effective way to get covered. So, if you have other ways to get adequate coverage, consider them thoroughly and see how they stack up against a short term policy.
Check to see if Short Term Coverage is Available to You
As mentioned earlier in this guide, short team health insurance coverage can’t be purchased in all parts of the US, so if you live in one of the aforementioned states, there’s no point considering this type of policy as it isn’t an option for you.
Consider What Level of Coverage You Need
There’s significant variation in the level of coverage you can get under a short term plan, so it’s important to think about what level of coverage would give you the most bang for your buck.
In addition to considering how much coverage you want, you should also think about how long you want to purchase coverage for.
Shortlist Insurers and Policies
Now that you’ve established that short term health coverage is suitable for you and you’ve decided what kind of coverage you want, you can begin looking at insurers and their individual plans to shortlist suitable options.
Once you have a few affordable plans to choose from, you should try to narrow down your selection by the process of elimination until you end up with a clear winner.
Final Thoughts
Short term health insurance can be a great way to limit your exposure to costly medical bills in certain periods of your life, such as when you’re in between jobs. However, it’s important to stress that they should only be used as a short term alternative to more conventional medical insurance and they aren’t suitable for everyone (for example, if you have a preexisting medical condition.)
Other standard insurance consumer advice also applies to these plans. For instance, you should always read the fine print to understand exactly what level of coverage you’re purchasing and under what circumstances your policy may be voided.
Furthermore, as it’s an ongoing expense, it’s worth taking the time to shop around and compare plans, as any cost savings you make will add up over time.
A Quick Summary
- A short term health insurance policy is a low cost, low coverage plan which can provide medical coverage for a matter of weeks up to just under a year.
- These plans are, in many ways, an alternative to standard health insurance coverage, but there are some key differences to bear in mind.
- As a general rule, these policies have lower premiums, higher excesses and offer substantially more restricted coverage than conventional health insurance plans.
- Their main benefits including offering flexibility, being affordable and they are especially useful for people in between jobs.
- Short term health insurance isn’t available in a few States, such as California, Hawaii and New Jersey.
- It’s possible to purchase a plan for less than $100 per month, though you should expect to pay more if you’re interested in additional coverage.
- When trying to find the best policy for you, it’s important to shop around and compare different plans to find the one that offers the most bang for your buck.
- It’s always very important to read the fine print before committing to a policy so you know exactly what level of coverage you’re getting and so you understand all the terms of the plan.