Five Facts to Know Before Buying Short Term Insurance
Five Facts to Know Before Buying Short Term Insurance
Short Term Health Insurance is a kind of medical insurance whose coverage is applicable for a certain period of time only. In addition, it covers fewer illnesses compared to what long term insurance policies do. However, it has a much lesser monthly premium cost compared to ACA (Obamacare) or any employer-based insurance plans. Short term health insurance is a kind of insurance that many millennials prefer over long term insurance plans. But what exactly are the things that you should know?
It is Not for Everybody
Short term health insurance plans are ideal for certain people, but not everyone. The reason it is less costly is because you are covered for a brief period of time only and the illnesses and conditions covered in your plan are also limited. Is this good or bad? Well, it really depends on your condition. Short term insurance is ideal for individuals who are getting off their long term plans temporarily. Examples are:
Children turning into adults and thus will be taken off as their parents’ dependents
Individuals switching jobs
Those who missed the open enrollment season for their long term insurance
Individuals who are in college or those in the process of looking for a permanent job
Dependents who lost long term insurance overage after a divorce
It Significantly Varies from Affordable Care Act (ACA)
Short term insurance has significant differences from Obamacare insurance policies in that it has lesser coverage than ACA. However, this can work to your advantage because short term insurance is flexible. For example, short term insurance does not cover pregnancy. ACA, however, charges you money for pregnancy coverage, even if you are a male.
Preventive care is also limited in short term insurance and not all companies offer it, as opposed to ACA, where preventive care is one of the 10 requirements. In addition, not all short term insurance companies cover the cost of RX drugs (prescription) while these are mandatory in ACA plans.
You Only Pay It for When You Need It
This is why short term insurance is also called a travel insurance. You typically pay for insurance that covers a specific period of time. After this, the coverage is gone. Short term insurance plans are very affordable and are usually paid on a monthly basis. The average cost is about $30 per month. If you want to save more, you can choose from a wide array of offerings such as reducing the plan’s benefits, choosing a higher deductible, or paying your total premium up front to get a significant discount.
It Has Co-Pay and Co-Insurance
Both of these apply to short term and long term insurance plans. A copay, simply put, means that you and the insurance company share the amount of the services you availed. The split between you and your short term insurance company will vary per plan. Let us say that you paid your doctor a visit and the cost is $100, you may need to shell out $35 and the insurance company will pay for the rest.
In coinsurance, you pay a certain percentage of the medical expenses after you have met your deductibles. If your coinsurance is 30%, this means that you will pay $30 for every $100 of the total medical bill (after deductible is met) and the rest will be shouldered by the insurance company.
You Cannot Always be Approved to Enroll
Many short term health insurance companies will deny the application of individuals who have pre-existing conditions. This is not so bad considering that these companies are taking a huge risk in insuring somebody who has an existing health condition. Remember, insurance is a business. Companies take a risk of paying a significant chunk of your medical expenses in exchange for a fraction of that amount, which is pretty much your premium.