While the ACA has afforded many Americans the opportunity to purchase health insurance, you may find yourself in a position where you are currently ineligible to sign up for an ACA plan, but are still feeling like you need some level of health coverage.
Short Term Health Insurance (STI) is not a substitute for an ACA plan, and it will not exempt you from a tax penalty for not having comprehensive coverage. However, it can take care of a major, unforeseen health catastrophe if you cannot yet enroll in the marketplace. The following situations are the most common for those needing to purchase STI coverage:
- You are in between coverage periods
- You missed the annual/open enrollment period
- You missed your 60 day enrollment window following a Qualifying Life Event
- You do not qualify for Special Enrollment status due to a Qualifying Life Event
- You need additional coverage because you plan on traveling out of state and have a plan with a limited coverage area (Separate from international travel medical insurance)
- You do not qualify for an ACA subsidy or for Medicaid (remember you will still be required to pay a tax penalty regardless of your qualification status)
- You choose to drop your COBRA coverage (Purchase of a STI plan disqualifies you from COBRA)
The Cost of Coverage
Several tiers of coverage exist, but you can generally expect the following:
- Low premiums with high deductibles
- Deductibles typically ranging from $1,000-$10,000
- Coinsurance typically offering 70/30 or 80/20 coverage
- Coinsurance costs capping out between $10,000 and $20,000 before the insurance company pays additional costs in full
- In some instances, lifetime limits on benefits may apply
Is Short Term Insurance right for me?
First, we encourage you to speak with one of our agents. A STI plan does not qualify as the government’s “minimum essential coverage” and it is not the same as the ACA catastrophic plans, and will not exempt you from the federal tax penalty. (2016 penalties: $695 or 2.5% of income, whichever is greater.) Additionally, choosing a STI plan and then dropping its coverage will not trigger a special ACA enrollment period. If after speaking with an agent, you determine that STI coverage is your only option, we will assist you in choosing the plan that best fits your needs. Our agents will cover all your questions about a STI plan, but you can generally expect that STIs will have some of the following limitations:
- Coverage periods for 1 – 12 months
- Limited networks
- No or limited prescription drug coverage
- No subsidy relief
- Non-renewable coverage periods. (You must reapply if you want to continue with a STI plan)
- Denial of preexisting conditions (Including conditions diagnosed during your last coverage period with the same STI plan)
- Denial for non-health related issues
If you are eligible for ACA coverage, please take it; you will receive greater coverage, you cannot be denied coverage based on your health, and many preventive and essential benefits are included in these plans. However, if you are ineligible for ACA coverage, a short term plan may provide you with peace of mind until you do become eligible, and we are happy to help you consider all of your options.
