For Consumers

What you need to know about short-term medical plans

If you need temporary insurance during a gap in health insurance coverage, short-term medical plans may suit your needs. However, you should be aware there are significant differences between short-term medical plans and health insurance.

What are short-term medical plans?

Short-term medical plans provide temporary catastrophic coverage, such as if you’re in a car accident or suffer a heart attack. They only provide coverage for a limited amount of time if for some reason you’re unable to enroll in a health insurance plan. These plans tend to be cheaper than health insurance, but the coverage comes with limitations.

What you need to know before you buy a short-term medical plan

Short-term medical plans do not meet the definition of an individual or group health insurance plan under the federal Affordable Care Act (ACA) or Washington state law. This means short-term medical plans are exempt from a number of coverage mandates ACA-approved health insurance plans must provide to plan enrollees. As a result, if this is your only form of coverage for 2018, you could face paying IRS tax penalties for not having an ACA-approved health plan.  

Before you consider buying one of these plans, here’s what short-term medical plans can do:

  • Deny your application for coverage or charge you higher premiums based on your medical history, including pre-existing conditions.
  • Base your premium on your age, gender and other factors.
  • Exclude benefits for certain types of illnesses and treatments.
  • Cap the dollar amount on benefits the company pays.
  • Apply dollar caps and higher deductibles on coverage.
  • Drop the 10 essential health benefits (www.healthcare.gov) such as maternity care, mental health services or prescription drugs. 
  • Cover you only for a limited period of time (up to 3 months).
  • Deny renewing you once your coverage period ends. If you want to continue, you must reapply and the company will thoroughly review your application for any pre-existing conditions.

Who sells short-term medical plans?

If you decide to buy one of these plans, you should only buy one from a Washington state licensed agent or an authorized company