Is Short-Term Health Insurance Right for You?
Although short-term health insurance is not for everyone, recent changes in the sector have made them a more desirable option for individuals looking to lower their monthly medical insurance costs. The major value proposition of short-term limited-duration insurance plans, often referred to as term medical, is a great coverage offering with a lower monthly premium.
Individuals can receive quality medical coverage and a national PPO network at a significantly lower cost due to decreased risk. Similar to term life insurance, by only guaranteeing coverage for 364 days, medical insurance companies take on less risk and thus, can offer term medical plans at a lower cost.
The average monthly cost for short-term limited-duration medical insurance is around $325 for a family, while the average ACA plan costs $1,500 a month for families. If you qualify for premium tax credits toward an ACA plan, premiums can be much lower, but not all individuals qualify for such credits.
I thought term medical plans were only good for 3 months?
On Wednesday, August 1, the Trump Administration announced a final ruling that greatly impacted the term medical sector. Previously, short-term health insurance was limited to a 3-month duration before renewal was required, but the new ruling extends the coverage period to 364 days. Plans can be renewed up to three times, for a total of 36 months.
As of October 1, 2018, local and nationwide insurance carriers can begin to offer short-term medical insurance to eligible individuals. The plans will vary from state to state and carrier to carrier, however, five states do not currently offer short-term plans: New York, New Jersey, Vermont, Rhode Island and Massachusetts.
Is short-term health insurance too good to be true?
Yes and no. Short-term health insurance, just like the name, is a great short-term option for reasonably healthy individuals or families. The increased duration of short-term plans makes them much more desirable for many working Americans, as they can now receive great coverage at an affordable cost for up to three years.
The downside to short-term health insurance compared to ACA plans is that those plans don’t cover pre-existing conditions. ACA plans, on the other hand, are required to accept all applicants regardless of medical history, which is part of what increases their premium costs compared to short-term plans.
So what if I have a pre-existing condition?
If you have a pre-existing condition, a short-term plan may not be the best option for you. However, it might be worth looking into the actual costs of your pre-existing condition to compare savings.
For individuals whose pre-existing condition involves a monthly prescription (this could range from acne to diabetes), you might be surprised about the monthly cost of your medication if you paid in cash. Even certain medical procedures such as x-rays, immunizations or fluoride treatments at the dentist might cost less than you think when paid in cash.
That said, the savings received from choosing a term medical plan could outweigh the cost of your regular medication or certain procedures. Visit GoodRX.com and Healthcarebluebook.com to see the potential costs of medications and procedures to determine if limited-duration health insurance is right for your budget.
How do I know what type of plan is right for me?
At Remodel Health, we don’t believe in one-size-fits-all, so it’s important to know the pros and cons behind each type of insurance before making a decision. Interested in talking with a professional about your organization’s health insurance options? Visit our website for more information or email [email protected] and a member of our Engagement team will reach out to you individually.