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.