- New federal rules have been imposed that allow longer durations for short-term plans.
- Short-term plans are not available in 11 states of the United States.
- One of the main benefits of a short-term plan is that the premium is cheaper than other insurance plans.
- The main disadvantage of a short-term plan is that it doesn’t cover any pre-existing conditions.
What do we mean by Short-term coverage?
Short-term plans are affordable policies mainly designed for healthy individuals and families. This kind of plan is helpful while an individual wants to switch from one life event to another without a comprehensive health plan. It is a very basic medical underwriting for determining the applicant’s eligibility for the policy and also don’t include pre-existing conditions. So, if the applicant has any past medical conditions before the short-term plan coverage doesn’t cover that.
11 States where short-term plan is not available
Many states have such a plan; however, there are 11 states in the United States where a short-term plan is not available. The reason why some states don’t have availability is due to strict state regulations that resulted in the ban of such policies and restrict them from selling the short-term plans. In Washington, the short-term plans cannot be purchased between the period of November 1 to December 15, but are available outside the mentioned date range.
The following are the 11 states where such coverage is not available:
- New York
- New Jersey
- Rhode Island
- New Mexico
Advantages of short-term plans:
- Lower premiums
Short-term insurance plans are affordable with a lower premium and a wide range of deductibles.
- Quick process
A healthy applicant can start such type of policy on an immediate basis. After application, the coverage can start as early as the next day. Further to that, if the individual knows the period he wants to be covered; some insurer may allow a single payment for the whole period of coverage.
Short-term plans allow lower premium, deductibles, and many other cost-cutting benefits. This type of plan is considered less expensive than ACA-complaint major medical plans.
- Good flexibility
The insurance policies cover a range of physician services, inpatient care, outpatient, and surgery. Additionally, policyholders sometimes have the option of choosing their preferred doctor and hospital without any restrictions.
- Ease of enrollment process
The enrollment process is very simple with yes/no questions based on major health issues.
- Extended Durations
A short-term plan can be extended to a period of three years. This implies an applicant can apply one once and remain insured for up to three years.
Disadvantages of short-term plans:
- Doesn’t cover pre-existing conditions
One of the main disadvantages of such policies is it doesn’t cover pre-existing conditions. Such a plan covers only those health conditions that occur after the policy becomes effective and not pre-existing medical conditions.
- Not comprehensive
This kind of plan doesn’t cover everything that an ACA policy would provide. For example, short-term plans do not cover routine office visits, maternity, mental health, or preventative care. Also, most of the plans don’t cover prescription drugs unless the individual is hospitalized.
- Billing problem in some cases
Sometimes it may happen that the plan doesn’t have a provider network. It means that the individual has opted for the doctors and hospitals that have not agreed to accept the insurer’s reimbursement rates as payment in full. This would result in higher out-of-pocket costs.
- Gap in coverage
The time when the short-term plan ends, the individual may not be eligible to purchase a regular plan in the individual market if it’s outside of open enrollment.
Hence, a short-term has some benefits like lower premiums easy enrollments and less expensive. Its main disadvantage it doesn’t cover pre-existing conditions. Therefore, one should apply for short-term plans based on the situation and keeping in mind the benefits and the drawbacks.