Nobody expects to be unemployed, so when an unexpected layoff occurs it usually leaves us scrambling to make things work. The primary focus is obviously to find new employment to keep the income stream going, but losing your job also means losing your benefits. That may not be a huge concern for healthy folks, but for anyone who requires regular medical care or wants to be prepared in case of an emergency, losing insurance is a monumental problem.
Fortunately, there are a number of solutions that you can turn to for interim health insurance. These options are often more expensive and come with limited coverage, but they’re a great way to bridge the gap while you’re looking for alternate employment.
You may have heard of short-term insurance and are wondering if it is the right solution for you. Temporary solutions may serve as a stopgap to temporarily handle breaks. Individuals who are between jobs, waiting to be eligible for medical care, without health coverage, or waiting for other coverage to begin may be suitable candidates for this short-term health solution.
What Is Covered by Short-Term Insurance?
There is no one-size-fits-all answer to this question. What is covered will vary based on the company you purchase from and the product you purchase.
Temporary solutions need not comply with the Affordable Care Act guidelines. Those that comply with the ACA must provide a set level of coverage referred to as “minimum essential coverage.” Temporary plans are not held to these standards.
A temporary option might provide options similar to what you would expect from a traditional health plan. This could include urgent care, preventative care, emergency care, and doctor’s visits. Sometimes it also includes prescription medications.
Similar to traditional plans, there may be a cost-saving incentive if you visit in-network providers. Since what’s included by these varies from company to company, it’s an excellent idea to familiarize yourself with any exclusions and limitations prior to purchasing one. This will give you a concrete idea of what will and will not be included.
What Isn’t Covered?
Most temporary solutions will not include your routine medical needs. Two consistent exclusions are maternity care and pre-existing conditions. In most cases, mental care, preventative dental, and vision care are also excluded.
You will be required to reveal pre-existing conditions to your insurer prior to applying for a temporary policy. Failure to inform the company about a pre-existing condition could lead to your policy being terminated. Even if the policy is not terminated, the pre-existing condition will not be covered.
With gap solutions, they can deny you care for any reason laid out in the exclusions and limitations. Therefore, it’s imperative that you do your due diligence prior to purchasing a temporary solution.
What Are the Benefits of Temporary Health Insurance?
Temporary plans, like those offered by AHiX Marketplace, are a phenomenal option for many individuals who lack insurance. Some benefits include:
Freedom to Choose Only What You Need
Traditional health plans comply with the ACA. As such, they must offer mental care services, prescription services, maternity care, etc. You will pay for these services if you will benefit from them. For a person who can afford these, this is great. But it means an added burden for those who cannot. Temporary options offer more customization.
To be clear, purchasing gap insurance does not mean that you can pick what gets covered buffet style. However, it does give you the ability to opt-out of things that you won’t use. For example, if you never go to the pharmacy, then choosing a temporary solution without prescription drugs may be a good idea.
Not As Temporary As They Used To Be
In 2017, the duration of temporary plans was capped at three months. Later, the government removed this regulation, allowing temporary solutions to last for just under a year. These regulations make it possible to renew it for up to 36 months. A person who wants to keep their same plan for up to three years cannot pay for that possibility.
In the interest of full disclosure, the longer gap solutions carry a price tag that is up to 50 percent more than those that last for three months or less. If renewability is not important for you, choosing the cheaper, shorter, and nonrenewable option might be a good option.
Grouped with Healthy People
Short-term plans only accept healthy individuals. They don’t include injuries or illnesses that began prior to your coverage. This means that short-term solutions have a lower risk pool when compared to other medical plans. People who use short-term insurance need less care.
This is important because a healthier risk pool leads to lower premiums. You can purchase a short-term plan for around 50 percent less than ACA solutions. ACA solutions have to accept everyone.
What Are the Downsides of Short-Term Insurance?
As mentioned, short-term insurance does not include pre-existing conditions. If you knowingly or unknowingly had a condition when you purchased short-term coverage, you will either need to get a different plan or will need to pay out-of-pocket to have that condition treated.
Short-term insurance does not include maternity care, prescription drugs, or preventative services. Some may offer dental discount options or drug discounts. While these may save you money, they are not the same thing as insurance.
After the term of the insurance is up, you will have to reapply. There’s no guarantee you will get re-accepted, especially if you were ill or injured while you had coverage. This could mean that the care you were receiving will abruptly come to an end and you will need to pay for it out-of-pocket.
Term health insurance is not the best option for individuals who have chronic conditions or who are taking expensive medication. Individuals who fall into this category may want to compare prices, including the ACA, to determine which option is right for them.
When determining whether short-term insurance is right for you, it’s good to remember why you are purchasing health insurance. Most people don’t purchase insurance in case they stay healthy. People are purchasing health insurance to protect themselves from expensive medical bills or a serious injury or major illness. Some of the biggest medical costs a family may face are things like pregnancy, prescription drugs, and long-term illnesses.
Short-term policies give people the option of buying cheap coverage while they are healthy. However, that coverage becomes a lot more expensive once they get sick.
Alternatives to temporary coverage
Temporary health insurance has always been a great option for bridging the gap between long-term plans, but let’s not forget that the Affordable Care Act provided another solution for folks who lose their coverage.
Normally, Americans who purchase a traditional health plan through the healthcare exchanges (aka Obama Care) can only do so during the annual open enrollment period. However, the Affordable Care Act provides an exception for anyone who loses coverage during the year and needs to sign up for a new plan to avoid losing insurance. As long as you can verify that you’ve lost coverage (which your old insurance company can do with a simple termination of coverage letter), you can actually sign up for a long-term plan at healthcare.gov outside of the open enrollment period.
In fact, the ACA goes a step further by offering plans at a reduced cost for folks who have lost their job and are dealing with lower income. Whether you’re unemployed for 12 days or 12 months, you can get an affordable plan from healthcare.gov that doesn’t expire within a few months and doesn’t have all of the strings that come attached to short-term plans. That means pre-existing conditions are included, deductibles are reasonable, and you’re not paying an arm and a leg for bare-bones coverage.
That said, you have a limited window to sign up for an ACA plan after losing coverage — 60 days to be exact. So be sure to take advantage of this and sign up for a great plan before your exemption period ends!