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Important Information About Short-Term Health Plans
You may be considering short-term health plans, also called term insurance, as a temporary measure to provide needed coverage. However, you may not be aware of important information regarding these policies. Before you choose an insurance company, there are a few things you should know especially in regards to restrictions and benefits.
As the cost of marketplace policies skyrocket, short-term health plans are growing in popularity as a bridge in coverage. As a result, more insurers are offering these policies, but with so many options, making an informed choice can be difficult.
In addition, Congress has recently changed laws regarding healthcare, and you may not be aware that you now have greater freedom of choice. It’s anticipated that more changes will be forthcoming as legislators seek to improve government mandates so keeping an eye out for changes in the political landscape is important.
Short-term health plans aren’t the same as major medical coverage or employer-sponsored coverage, both of which are often bloated with benefits that not everyone uses. In many circumstances, temporary plans can be a better choice than getting insurance through the marketplace. Plus, it usually comes with a significant savings on premiums.
Short-term health plans usually have a coverage period of 90 days. If you need healthcare insurance for a shorter period of time like a month or two, you can circumvent it by selecting a policy for a longer duration. Or you could choose the monthly payment option, then cancel coverage when you no longer need it.
Some short-term health plans allow you to extend the coverage period should your circumstances change and you find yourself needing healthcare insurance for longer than you’d originally anticipated. Usually, there’s a limit to the number of times you can renew a policy and for how long—an important factor to research when evaluating insurers.
Under the recently revised rules, policies can be issued for a maximum of 364 days. Insurers are only allowed to extend policies up to a maximum of three years or 36 months, but not all policies can be extended.
While three years isn’t considered “short-term” for most people, sometimes situations arise when you need to extend your policy such as when a job hunt takes longer than expected or a relocation is postponed. It’s important that you understand this up front even if you believe you’ll only need a policy for a shorter period as circumstances change.
Coverage Isn’t the Same
The advantage of short-term health plans is that they can be customized to fit your needs regardless of your situation. But these policies don’t provide major medical coverage, and not every plan offers the same benefits.
While temporary plans are usually more affordable, they don’t offer the same benefits as those that are mandated by the Affordable Care Act (ACA) such as the “10 essential health benefits.” A temporary plan is usually more suited to the individual as it allows you to choose just those benefits you want and forego the more expensive provisions you don’t need and won’t use.
Lower premiums are due to the flexibility of short-term health plans in that you only pay for the coverage you want. As a result, you can gain enormous savings with a customized short-term health plan—crucial depending on your reasons for opting for one such as a job loss or divorce.
Most temporary health plans don’t cover preexisting conditions such as hypertension, diabetes, heart attack, stroke, or asthma. You’ll need to read the policies carefully to make sure you understand the benefits and what isn’t covered before you enroll.
Those with preexisting conditions might be denied coverage, which can be difficult for people whose life circumstances are uncertain or who are currently under treatment for an injury or illness such as cancer.
If you’ve a preexisting condition and you need it covered, you might want to explore alternative healthcare coverage such as a “guarantee issue plan,” which provides coverage regardless of your health status or risk. However, the premiums for this type of plan can vary greatly depending on conditions and benefits.
Understanding important differences among insurers and plans as well as changes to existing laws will make the process go more smoothly for you. Take a few moments to understand what your needs and goals are for healthcare coverage along with the restrictions in healthcare coverage. You’ll be better to evaluate healthcare plans and make an informed decision.
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