Recommendation #4 During Open Enrollment: Short-Term Major Medical

Open enrollment is in full swing, but your clients may have limited options for health care coverage since many insurance companies have opted out of the individual market or because they don’t have access to group health coverage through their place of employment.

This week we conclude our alternate recommendations during open enrollment with the discussion of our fourth and final recommendation, Short-Term Health Insurance Plans. Catch up on our first, second, and third recommendations to help your clients find the plan that works best for their needs and how much they can afford.

What You Need To Know About Short-Term Health Insurance Plans

Short-term plans can cover you for any period from 30 days up to a full year and are intended for people who do not want or cannot afford major medical insurance or who want a temporary form of limited coverage before they obtain major medical health insurance. While coverage can begin immediately and plans are affordable, they don’t provide consumers with the benefits or levels of coverage the Affordable Care Act (ACA) requires, which means consumers may face paying a tax penalty for not obtaining ACA-Complaint coverage.

Short-term health plans could be helpful to your clients if:

• Your client has a change of employment, is unemployed, or in-between jobs
• Your client needs proof of insurance for special activities
• Your client is waiting to be eligible for Medicare

Short-term medical plans offer:

• Affordable rates
• Quick coverage
• Flexible coverage terms from 30 days to a full year

These plans will provide coverage until your client can get enrolled in their group health insurance plan at their next job or become eligible for Medicare. Short-term insurance carriers can limit the number of times a short-term insurance policy may be renewed.

Some states may even inhibit consumers ability to apply for more than one consecutive short-term insurance plan. They can also reject applicants based on health status and typically don’t cover pre-existing conditions, pregnancy, or prescriptions. If the pros outweigh the cons, short-term insurance plans are an affordable way for your clients to obtain coverage.

How Short-Term Health Plans Compare to Major Medical Health Plans

Many insurers are allowing consumers to purchase up to four consecutive short-term plans (each 90 days long) with a single application. These are called 4×3 plans and every 90 days deductibles and co-insurance start over. This is very similar to major medical plans that also provide coverage for an entire year. The only difference is that the deductibles and co-insurance start over every 3 months for short-term plans.

The main difference between short-term plans and major medical plans is that short-term plans do not provide the comprehensive coverage that major medical plans do, which cover the minimum essential benefits. Short-term plans don’t cover pre-existing conditions and typically won’t cover routine office visits, maternity, mental health or preventative care, and many plans don’t cover prescription drugs unless the consumer is hospitalized.

The services that short-term plans do cover are related to unexpected illness and injury like outpatient visits to doctors, emergency room visits, hospital stays, surgeries, x-rays, and lab work. Insurance companies who offer short-term plans require applicants to answer a medical questionnaire when they apply for coverage and they can decline coverage if you don’t meet their criteria.