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When does it make sense to get short-term health insurance?

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6 mins

Think you might be in the market for short-term health insurance? You may need it due to temporary gaps in health insurance coverage.

You can't get as much coverage with a short-term health insurance policy compared to a long-term health insurance policy. However, in the right situation, they might make sense for you.

Let's go over the definition of short-term health insurance, why you might want to get this type of coverage, how to get coverage, and more.

What is short-term health insurance?

Short-term health insurance is a type of health insurance plan that has a limited duration, such as several months to a year. Think of it as a way to fill temporary gaps in insurance coverage. Despite this, they do not fulfill ACA standards, offer limited benefits, and cost more. You may hear short-term health insurance also referred to as limited-duration short-term health insurance or temporary health insurance.

The type of short-term health insurance coverage depends on the type of coverage you choose. For example, it might cover:

  • Emergency hospital visits
  • Prescription medications
  • Doctors appointments
  • Hospital stays
  • Surgeries for illness or injury
  • X-rays
  • Laboratory services

Most temporary health insurance plans don't cover preexisting conditions. Moreover, you often cannot get short-term health insurance for maternity leave or mental health care.

They also have waiting periods. Short-term plans will not cover certain conditions and short-term plans also generally have an overall maximum amount they will pay out in coverage.

Read the details of your plan so you know about your plan's coverage, limitations and restrictions. It's easy to apply for and enroll in short-term health insurance online — it only takes a few minutes. Coverage can begin as soon as the next day.

Why get short-term health insurance?

Short-term health insurance plans work for people who can't currently afford major medical insurance or need coverage for a temporary period of time. The reasons you might want to get short-term health insurance include:

  • Getting off your parent's insurance: You may need to secure temporary health insurance coverage if you're between jobs. You don't want to go without insurance for even a day between getting off your parents' plan and going on your own plan. High medical bills could put you in debt for years.
  • You missed Open Enrollment: The Affordable Care Act's Open Enrollment period offers a period when anyone can buy major medical health insurance. If you missed Open Enrollment but haven’t undergone a qualifying life event that makes you eligible for a special enrollment period (such as moving, getting married or divorced or adding a child to your family), you can get short-term health insurance.
  • You're close to getting Medicare: If you retire early but don't quite qualify for Medicare, you may need a short-term health insurance plan. Once you meet your deductible, your plan will help pay for additional covered expenses. It is important to note that temporary coverage may not be an option if you have preexisting conditions.
  • You're in an employer waiting period: Sometimes it takes a while to become eligible for your employer plan. It could take as long as 90 days to become eligible for employer-sponsored health insurance and you may want to get short-term insurance during the interim period.
  • Traditional insurance costs too much: Short-term insurance might offer an alternative that costs less than regular insurance. However, remember that it only offers a temporary option.
  • Needing coverage while you're in college: You may not have a parent who can cover your insurance needs while you attend college. Short-term health insurance plans might temporarily give you the coverage you need as a college student. Learn more about insurance for college students.

You might find yourself in another situation that causes you to need to get short-term health insurance — this list isn't exhaustive. Look carefully at your own situation to make sure it makes sense for you.

How to get short-term health insurance

You cannot get short-term health insurance in New York, New Jersey, Maine, Massachusetts, Rhode Island, Vermont, California, Colorado, Hawaii, Connecticut and New Mexico in 2021 due to bans or state laws in those states.

Step 1: Choose a provider

Look into various websites that offer numerous plan options. These online marketplaces and insurance agencies provide quotes with many insurers all at once. You can also call an insurance company that sells short-term plans directly or look into the various options on an insurance company's website.

You can find short-term health plans at several national companies. Regional companies also offer more localized service, so finding the right policy can depend on where you live and your specific preferences.

Step 2: Buy a plan

You can buy short-term health insurance online, although paper applications and in-person enrollments are available in some cases. Research several plans before you make the right decision for you.

Step 3: Wait for underwriting

You must wait for medical underwriting in order to get a short-term health insurance policy. Short-term plans usually get approval quickly. Most applicants get approved within one to 14 days. The earliest short-term coverage that occurs a day after applying, but it depends on your insurance company.

How long can you have short-term health insurance?

Most short-term plans limit your coverage to a maximum of 12 months at a time (or less). Many short-term health insurance companies will limit how many times you can repurchase coverage in a row.

The Trump administration extended the allowable duration of short-term plans and the ruling has since been upheld by an appeals court in a 2-1 ruling in July 2020.

To put it simply, you can get short-term plans with initial terms of up to 364 days and your plan can renew as long as its total duration doesn’t exceed 36 months.

In other words, you can renew your short-term health insurance plan without additional medical underwriting. You can use the renewal to keep the same plan for up to 36 months. However, plans with renewability options may cost more than a nonrenewable short-term plan.

Determining your coverage needs

Temporary health insurance plans don’t usually offer the same amount of coverage as long-term health insurance. However, short-term health insurance plans offer great emergency or short-duration coverage for many reasons, whether you can't purchase an ACA-compliant plan quite yet or whether you may need temporary coverage before your long-term health insurance plan kicks in.

Whatever the reason, decide whether a short-term health insurance policy might make sense for your needs. Then, before your short-term policy is up, determine how you'll get on a long-term plan.

Melissa Brock is the founder of College Money Tips and a full-time freelance writer and editor. She loves helping families navigate their finances and the college search process.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

— Published July 15, 2021
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