When the Affordable Care Act was put in place and the idea of a once a year open enrollment was put in place, there became a need for a stop gap health insurance to bridge the time between losing benefits mid-year and being able to leverage exchange policies that started the next January. Short Term Medical Insurance plans were born out of that necessity. They serve a purpose and have been highly controversial for some folks as they can be a bit misunderstood. Let's understand why.
Short Term Medical Insurance Original Intention
The original intention was for these policies to be in force no longer than three months, which is where the short term comes from in the name. While many make fun of politicians for some of their decisions, they were smart enough to realize that three months was not going to bridge the gap between March and the next January if you lost benefits that early in the year. As a result they decided to allow you to renew the policy for a total of nine months. The policies were set up to provide desperately needed coverage between Open Enrollment periods for those without benefits.
What Has Short Term Medical Insurance Become
When the back and forth wrangling over how the Affordable Care Act Exchange should be administered has progressed, there have been some distinct changes enacted with respect to these policies. Primarily, the original three month time frame has now been extended to a full twelve months, less one day. The number of times that you can have the policy reissued has remained constant, so that original nine months is now three years, less three days.
More than the time element, many Texans have begun to rely on these policies as a great alternative to traditional health insurance. These policies can often times be significantly less expensive than their ACA compliant counter parts. This is due to the fact that short term medical insurance policies typically don't cover some provisions that are required by policies that are considered compliant by the Affordable Care Act. If you are done with child rearing, having maternity benefits seems a bit useless. And in that same vein, those benefits are one of the biggest claim costs for health insurance companies. This kind of thinking allows for lowered premiums if the shoe fits.
If you have been either cash pay or on a high deductible health plan, you are used to paying cash for a single visit to a physician. While some may find this concept awkward as we've been convinced that co-pays are all that should be required, this notion of paying cash for a single visit is typically how the short term medical insurance plans work. These visits count towards satisfying your deductible where as they don't in a traditional co-pay plan. As a result, this subtle change can also lower and simplify premium pricing for the plans. Many Texans find this appealing.
What Else Should I Consider With Short Term Medical Plans
We are always looking for checklists. Here's a quick pros and cons rundown.
Cons
- These plan are fully underwritten. This means you may not qualify.
- You will not have all ACA required coverage items. You need to understand this and how it affects you and your family.
- If a major health event occurs during a policy year that changes your underwriting status, you will not qualify to have it reissued.
- You will need to acquire pharmacy coverage separately.
Pros
- Wide deductible ranges allow you to treat this as catastrophic coverage if desired.
- Policy can be issued for as little as one month. This provides flexibility for you.
- Affordable pricing can make these plans attractive to low utilization families or those on super tight budgets.
- Buying only the coverage you need, rather than a one size fits all approach can help you control your health insurance in a better fashion.
Short Term Medical Insurance Plans are not for everyone. We recommend understanding all of your options available on the open market today. If you like the idea of a Catastrophic Health Insurance, but are looking for a more robust set of coverage then a Short Term Medical Plan can absolutely work. If you are between group plans or waiting on Open Enrollment, Short Term Medical Insurance will be a great thing! However, you need to understand the limitations and underwriting involved.
If you're currently looking at health insurance in Texas and unsure of your options, we recommend working with an independent insurance agent so that you can evaluate your options. We at Insurance For Texans always work on your behalf, and not some big insurance company. If you would like to schedule a time to talk to an agent, just click the button below!
