SHORT  TERM  INSURANCE:  IS  IT  REAL?


Short term insurance, also called "temporary" or "gap" coverage, is very real. The only difference between a "regular" policy and short term coverage is that short term plans have maximum lifespans: some allow only six months of coverage in any 12 month period, others allow you to apply for up to 11 continuous months at a time, and a few will let you re-apply every six months for unlimited periods of time. You can go from carrier to carrier. These plans are fairly inexpensive, and cover no routine services, maternity, mental health or pre-existing conditions. You cannot get a short term plan if you or your spouse is pregnant, even if the spouse is not applying for coverage.) 

Minimum coverage is $1,000,000, with deductibles ranging form $250 to $7500 (the higher the deductible the lower the premium), and usually a choice of 80/20 or 50/50 coinsurance. These are major medical plans but, unlike the major medical plans under the Affordable Healthcare Act (ACA) of 2014, these offer limited benefits and do not exempt you from paying the penalty for not having healthcare reform-compliant coverage. You can generally go to any doctor, anywhere in the United States, for medical treatment. Some short term plans are affiliated with PPO networks and offer discounts on services obtained through those providers, though most allow you to use any provider, anywhere. These plans are creditable but are not healthcare reform compliant - so, again, if you take one in lieu of a more expensive helathcare reform plan, you will be liable for the ACA penalty (2-1/2% of modified adjusted gross income in 2016). These plans are an alternative to full-bore major medical plans, and otherwise ideal for people who are in pretty good health. They are also an excellent alternative if someone failed to acquire coverage during the open enrollment period. You may face the fine, but at least would have coverage.

As with any health insurance policy, claims payments when using a plan that lets you go anywhere, are based on UCR - meaning "usual customary and reasonable." What this means is if you have a cold and the doctor charges you $110 for the visit, and the UCR is $90, the carrier will base it's reimbursement or payment on the $90 and you will be responsible for the rest - even if you have an 80/20 plan. That carrier is paying it's portion of the obligation based on the UCR rate, not necessarily on what the doctor actually charged.  And, of course, the 80/20 coinsurance guideline doesn't kick in until you have met your deductible. The deductible must be met before the carrier pays anything.

Short term plans do not cover preexisting conditions  – by definition, short term products define preexisting as anything for which the applicant has seen a doctor, received treatment or medication, in the last three to five years (some application will ask "Have you ever...."). All short term plans ask medical questions. Without exception, they all ask if the applicant has been treated for cancer, diabetes, stroke, or heart disorders (usually in the last five years). If the answer is YES, the coverage cannot be issued.  A few short term plans have height and weight restrictions, which are fairly generous. 

Short term plans do not have written exclusions of coverage; they sinmply don't cover pre-existing conditions. They are meant to protect the applicant against a new illness or injury during the time period for which they have made application. If you make an application and answer any of the health questions "yes" - do not submit the app. Regardless of the circumstances, it is an automatic decline.

Short term plans DO pay off. One of our clients was diagnosed with a fast-metastasizing breast cancer at the age of 39; she had been on the plan just two months when the diagnosis was made, and the cancer, due to its deep-ductal location, could only be detected by a mammogram, not by feel. The carrier paid over $65,000 for her surgery and full reconstruction. Another client, nearing the end of a six month period, suffered a heart attack and the carrier paid for a triple by-pass. The client had proof this was not a preexisting condition: an EKG and physical just four months before purchasing the short term plan showed him in excellent health, there were no warning signs.

A short term plan can be paid for in full for the time requested (up to six months at a time) for a nice discount, or paid for monthly, for a slightly higher premium. Most will allow for automtaic bank draft or credit card billing; some, for a small fee, will send a monthly statement. Most plans paid six months at a time offer no refund on unused months, though a few do; planss paid month to month can be cancelled at any time.

Some plans offer a discount drug card (average discount 10-15% on brand name, 35-55% on generic). This card can be used on any prescription, new or pre-existing.

Maximum put-of-pocket expenses for a covered condition on most short term plans would be the deductible plus $1,000 - $2,000 (coinsurance), same as with most major medical plans.

The short term plan is ideal for: students between college and job, workers between jobs and group coverage... someone who just lost their insurance, for whatever reason, and is waiting for group coverage to kick in (they is often a wait period after employment starts)... someone who earns too much for Medicaid/AHCCCS but can't afford a full-featured plan ... someone who is a year from Medicare and in excellent health (they like the low rates) - or, as mentioned above, someone who did not apply for regular coverage during the open enrollment which ends on January 31st. 


Yes, short term or temporary insurance is real, it an excellent alternative when a regular plan is simply not feasible or affordable. Do not overlook this type of plan if you find yourself uninsurable due to cost or lack of employer-provided health coverage. I have had several clients takes a short term plan in lieu of a full-bore healthcare-compliant plan and just pay the penalty; these individuals obviously had no pre-existing conditions so knew that the short term plan would cover just about anything (not maternity or mental health) that came along. I don't recommend it as a routine practice but it is an affordable alternative, to get a consumer through to the next open enroellment (currently scheduled to start in November 2016).

 

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