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I've heard this frequently. "Why would I want Short Term insurance? I want it for at least a year!" In some states this is absolutely doable. In other states, not so much. So lets take a look at some of the facts!
Why is it called "Short Term Medical" insurance?
Surprisingly, Short Term Medical plans have been around for decades! The original concept for these options was to fill a gap in coverage. Most commonly when transitioning between jobs. Since employer benefits generally take 30-90 days to kick in, Short Term Medical plans were an ideal, affordable solution. By the early 2000's, millions of Americans were enrolled into these plans.
Lets fast forward to the Obama administration. While President Obama was in office, a major law was enacted to change the way American health care works. The Affordable Care Act. Part of this law required that we must have "Minimum Essential Coverage" or face penalties at tax season. Nobody likes having problems with the IRS, am I right?
Short Term Medical plans are privately owned and therefore, not federally regulated. They have always had certain limitations and exclusions. Since STM's do not meet the "Minimum Essential Coverage" requirements, many Americans switched over to an ACA plan to avoid the individual mandate penalties. Then in 2016, the Obama administration ruled that these "temporary insurance" plans could only have a duration of 3 months with no ability to automatically renew at the end of their term. While the ACA was, and has continued to be, a great option for those with pre-existing conditions (because the act banned federally regulated companies from refusing coverage to those with major needs) plenty of healthy individuals felt stuck. Feelings of frustration like "why do I have to pay so much for my health insurance when I don't even go to the doctors?"
What has changed over the past few years that makes these Short Term plans a good idea?
In early 2018, the Trump administration sought to overturn many changes implemented with the Affordable Care Act. One was removing the individual mandate and another was increasing the duration of the "temporary" health insurance plans. In 2019, both the individual mandate penalty and the term duration limitations were lifted. So how did that effect Short Term Medical plans?
The federal ruling to overturn the Short Term Medical plan durations allowed each state to take the reigns and decide what is best for their consumers. Therefore the term durations and re-apply (or renewal) rules changed across the country. Some states decided Short Term Medical plans were not viable at all. These states include California, Washington, and most of the North East like New York, New Jersey, and Massachusetts. Some other states decided to keep the 3 month rule in place (I'm looking at you Oregon, Maryland and Delaware.) The rest of the states allowed these plans to be an option for longer terms though. 6 months, 12 months, even 3 consecutive terms of 12 months! With the individual mandate gone and term durations increased, many Americans breathed a sigh of relief. We now had more control over our personal health needs and finances.
How do I know if one of these plans is right for me?
Great question! First and foremost, these plans are NOT a good idea for anyone with chronic, pre-existing conditions. If you have had major health problems like Cancer, Stroke, Heart Attack, Type 1 Diabetes, Chron's Disease, Bipolar, etc you will be excluded from coverage. Now you might be thinking "wait a minute - I thought the ACA made that illegal?!?!" That's true for the companies participating in the Affordable Care Act. Think those like Blue Cross, Cigna, UnitedHealthcare, etc. Since Short Term Medical companies are privately owned and operated, they get to decide what benefits they offer, what they exclude, and what risk they will and will not accept.
Even if you have mild or moderate conditions like Asthma or ADHD, a Short Term Medical plan may not be a good idea for a longer period of time - especially depending on what medications you take. For more common and less severe conditions, there still tends to be a "waiting period" for services. So say you have been seeing a pulmonologist quarterly. Or a mental health therapist every month. These visits and medications related to your condition will not be covered for a certain period of time.
So when are STM's a no brainer?
There are quite a few scenarios where Short Term Medical plans make the most sense. These are some of the most common;
You're a thriving small business owner. Depending on your household size, you likely will not qualify for subsidies from the Affordable Care Act. The monthly premiums will then be astronomical. Since STM's base the monthly costs on age, location, and chosen coverage, you will very likely save hundreds of dollars per month!
You're a travel nurse. Since it's contract work which generally does not offer benefits, STMs are a great fit because they offer nationwide coverage. So if you reside in Florida but take a position in Arizona, your benefits go with you!
You or your child need affordable coverage for college, sports, or clinicals. Some colleges require their students have insurance. Most clinical positions in the medical field require you have insurance. And most student athletes (both high school and college) who do not play professionally are required to have health insurance. Most plans don't cover intercollegiate sports injuries but there are some STM's that do!
You are in between jobs. Employer sponsored benefits generally take 30-90 days to become active. Since STM's allow as little as 1 month of coverage, it just makes sense to choose this route for protection.
You live in a state that doesn't have "Expanded Medicaid." This one is really tough. Most people think if your income is low, you qualify for Medicaid, right? Wrong. Some states (especially in the South) do not have Expanded Medicaid. So unless you're a pregnant woman, a child, or are on disability, you can not get Medicaid. The next logical step would be the Affordable Care Act, right? Low income means $0 or super cheap insurance from the government, right? Wrong again. There is a minimum income requirement for subsidies (also known as an "Advanced Tax Credit" to pay for your health insurance.) Say you are a 28 year old single male, living in Texas, with an estimated annual income of $12,000. You will not qualify for subsidies and have to pay the full cost of ACA insurance. As mentioned above, since STM plans base their monthly costs on age, location, and chosen coverage, your insurance will likely be MUCH more affordable through the private market.
Summary
There are plenty of reasons why Short Term Medical plans are the right decision. I'm happy to help you navigate the options and choose the best plan for your needs. As a licensed broker in 40 states, I've seen a variety of scenarios and work with just about every insurance company. My goal is to ensure you can sleep at night knowing you and/or your family are properly protected.
Thanks for reading! I look forward to connecting with you :) - Shelly Taylor
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