If you are one of the many Americans that have missed the open enrollment period and do not have a qualifying life event that allows you to sign up the rest of the year, your options are fairly limited. You do not want to be without health insurance in its entirety, so short term health insurance might be a viable option. That being said, there are some things that you need to consider before purchasing any such policy.
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Advantages of Short Term Insurance Policies
There are some positive considerations to take into account when looking at a short term health insurance policy. The most obvious, given that we are still in the era of the Affordable Care Act, is that they are available year round. You will not have to worry about falling inside the open enrollment period in order to gain coverage. No matter what your circumstance might be, you will be able to purchase a short term policy (assuming you get approved of course) no matter what time of the year it might be.
In the face of increasing long-term health insurance premiums, many will find the fact that short-term policies often have a lower premium to be rather appealing. By way of example, the average monthly premium in the state of California recently was $177.
This is typically lower than one would pay monthly for a basic long-term policy purchase within the Health Insurance Marketplace. In addition, the network of providers, such as doctors and hospitals, is usually much broader within short term insurance plans. This affords the policy owner with more flexibility, which is helpful for individuals who are not locked into a particular family physician already.
Some Notable Disadvantages to Consider
While the Affordable Care Act forbids insurance companies from excluding individuals on the basis of a pre-existing condition, this provision is not applicable to short-term health insurance providers. If you have a pre-existing condition, you will either find it difficult to get coverage at all or discover at the minimum that your condition is not covered under the terms of the policy.
There are some benefits that will not be granted to you under a short-term health insurance policy. Women who are pregnant will not likely receive any maternity benefit. In addition, certain preventative and wellness services might be excluded, as will some benefits for prescription drugs.
Keep in mind that some short term health insurance policies will offer drug or dental discount plans, but these should not be mistaken as being the same as insurance. One other item to note is that short term insurance policies last less than a year, so you will need to apply again when your term of coverage is up. There is also no guarantee that you will continue to be accepted for the insurance, so that is something to take into consideration as well.
Deciding if Short-Term Cover is in Your Best Interest
In the end, there might be some plausible reasons why you will want to secure short-term insurance coverage. Most of these reasons are short-lived, which is why the type of coverage offered under such a policy is designed to last only a matter of months. You will want to keep the following in mind as you make your decision:
- Tax penalties will occur even if you have a short-term policy.
- Comprehensive health insurance is often more affordable than you think.
- Open enrollment needs to be planned for so you are ready to sign up.
- You are not guaranteed accepted into a short-term health insurance plan.
- You will typically need to file your own claims when on a short-term heath insurance plan.
If you do not have comprehensive health insurance, the chances are good that a tax penalty will be levied against you when go to file in April.
Short-term health insurance policies do not buy you anytime in this regard. So, if you add up the penalty and the premium for a comprehensive policy, you might very well find it to be finally advantageous to go with the latter. There are exceptions to the tax penalty, of course, so you can consult with your local tax professional to see if you qualify.
Financial Costs and the Open Enrollment Period
Many people opt for short term health insurance because they feel that comprehensive policies are simply too expensive for them. This might not be the case, so make sure that you shop around. You might be pleasantly surprised, particularly when you take the tax penalty just mentioned into consideration. In addition, there are numerous subsidies available to low-income earners and even the middle class, and this will further lower your premium costs in the long run.
Remember that the open enrollment period must be adhered to under the Affordable Care Act. This typically runs from November to January each year.
This is a major reason why people end up with short term health insurance in the first place. Plan ahead so that you are ready to purchase a comprehensive policy when the window of opportunity opens. If you do miss it, however, short term health insurance is seen as a much better alternative than having no protection at all.
A Brief Summary
In the end, health insurance is a personal choice. There might be a good reason why you opt for this type of insurance policy. If you are considering one, you should shop around and really do your homework. Not only can the premiums vary greatly, but so can the benefits. You want to ensure that you are well protected in the short term, and then focus on getting more comprehensive coverage as soon as you are able. This is likely your best course of action moving forward.
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