Missed open enrollment and don’t qualify for a special enrollment period? Short-term health insurance might be your best option until the next enrollment window opens.
If you didn’t enroll in coverage by the end of open enrollment, aren’t eligible for employer-sponsored coverage, and aren’t expecting a qualifying event later in the year, your options are pretty limited. You’re looking at policies that aren’t regulated by the ACA, including short-term health insurance, limited-benefit plans, accident supplements, critical illness policies, dental and vision plans, and medical discount plans.
Some of these work well as supplements to regular health insurance in Panama City. But most aren’t good enough to serve as your only medical coverage. The exception? Short-term health insurance, which is available in Florida and all but seven states.
The Closest Thing to Real Insurance
Short-term coverage is the closest you can get to actual health insurance if you need to buy a policy outside of open enrollment without a qualifying event.
For most of 2017 and 2018, short-term plans were capped at three months in duration. That was due to an Obama Administration regulation finalized in late 2016 that took effect in 2017. The goal was to curb abuse of short-term plans. People were using them for up to a year at a time, which pulled healthy people out of the ACA-compliant risk pool and destabilized it.
But things changed dramatically in 2018.
New Federal Rules Expanded Coverage Duration
In August 2018, HHS finalized new rules that drastically expanded the allowable duration of short-term plans. These rules took effect in October 2018, 60 days after being published in the Federal Register.
Key changes to short-term plans:
- Initial terms can now be up to 364 days
- Plans can be renewed as long as total duration doesn’t exceed 36 months
- People can string together multiple plans from the same or different insurers for longer than 36 months in states that allow it
- Plans must include disclosures explaining how they differ from individual health insurance
Keep in mind that states can impose stricter rules, and more than half of them do. Some had long-standing restrictions, while others adopted new rules specifically to prevent the Trump Administration changes from destabilizing their individual insurance markets.
Cost Comparison
Premium subsidies aren’t available for short-term plans. But the retail prices on these policies are more affordable than the unsubsidized price of ACA-compliant plans. They work well as a stop-gap if you just need coverage for a few months between other policies.
However, if your income makes you eligible for Obamacare premium subsidies, you need to enroll through your state’s exchange during open enrollment or a special enrollment period. Otherwise, you’re missing out on comprehensive health insurance and a tax credit.
Important: Call Star Nsurance + Tax to speak with a licensed insurance agent who can help you navigate all the different plans and find cheap health insurance in Clearwater designed for your needs.
What Short-Term Plans Cover
Some short-term plans have provider networks while others let you use any provider you choose. Unlike ACA-compliant plans, short-term policies have benefit maximums.
Common lifetime maximums on short-term plans:
- $750,000 coverage limit
- $1 million coverage limit
- $2 million coverage limit
This isn’t as good as regular individual insurance plans that no longer have annual or lifetime benefit caps. But it’s roughly similar to plans that were available just a few years ago in the individual market.
The concept of a lifetime limit doesn’t really matter when you’re talking about a plan that lasts at most 36 months anyway. You won’t be able to purchase another short-term plan if you develop a serious health condition during that time.
You’ll see plenty of short-term policies with much lower benefit limits. Ignore the options with benefit caps of $50,000 or $100,000. Pay attention to plans that offer at least $1 million in benefits.
The Application Process
Applying for short-term insurance is very simple. Here’s how it works:
- Select a plan that fits your needs and budget
- Complete the short online application
- Answer basic medical history questions
- Get approved and activate coverage as early as the next day
There are no income-related questions since short-term policies aren’t eligible for any of the ACA’s premium subsidies. The medical history section is generally quite short, nowhere near as long as the pre-2014 individual health insurance applications were.
Although the medical history section usually only addresses the most serious conditions to determine eligibility, short-term plans generally have blanket disclaimers stating that no pre-existing conditions are covered.
Call us anytime for a free quote at 813-563-5577.
Important Limitations to Know
Short-term plans are not as good as ACA-regulated policies that you can purchase during open enrollment or special enrollment periods. They’re not regulated by the ACA, so they don’t have to follow the ACA’s rules.
Here’s what that means:
Coverage gaps: Plans still have benefit maximums and aren’t required to cover the ten essential benefits. Most often, short-term plans don’t cover maternity, prescription drugs, preventive care, or mental health and addiction treatment. They don’t have to limit out-of-pocket maximums and they don’t cover pre-existing conditions.
Medical underwriting: They still use medical underwriting, so coverage isn’t guaranteed. If you have health issues, you might not qualify.
Prescription drugs: The majority of short-term plans don’t cover outpatient prescriptions. Using a pharmacy discount card may lower medication costs, and some discount prices may actually be lower than an insurance copay.
Losing Short-Term Coverage Isn’t a Qualifying Event
This is critical to understand. Loss of existing minimum essential coverage is a qualifying event that triggers a special open enrollment period for ACA-compliant individual market plans. But short-term policies aren’t considered minimum essential coverage.
That means losing your short-term coverage isn’t a qualifying event for buying an ACA plan. However, loss of a short-term plan is a qualifying event for employer-sponsored coverage, so you’d be able to enroll in a new employer’s plan when your short-term plan ends.
Here’s an example of how this works. Let’s say you lose your job and your employer-sponsored health plan. You have a 60-day window to enroll in an ACA-compliant plan. You also have the option to buy a short-term plan at that point, which may be available for up to a year depending on where you live.
But when the short-term plan ends, you no longer have access to an ACA-compliant plan. You’d have to wait until the next open enrollment, and a plan selected during open enrollment wouldn’t become effective until January 1st.
You could purchase another short-term plan, but your eligibility might depend on your current medical history. Some insurers offer guaranteed renewability under the new federal rules, meaning people can renew the plan without going through medical underwriting and keep it for up to 36 months. Not all insurers offer this option though.
The Obamacare Penalty
The federal tax penalty for not being enrolled in health insurance was eliminated in 2019 because of changes made by the Trump Administration. However, if you received a penalty for not having health insurance in 2018, you still have to pay it on your 2019 tax forms.
2018 penalty amounts:
- $695 for adults
- $347.50 for children
- 2% of your yearly income (whichever is higher)
This penalty was designed to protect people from skipping out on health insurance and not being able to pay off their medical expenses in the event of injury or illness.
Bottom Line
Although short-term plans don’t provide the level of coverage or consumer protections that ACA-compliant plans offer, obtaining a short-term policy is better than remaining uninsured.
Your best bet is to maintain coverage under an ACA-compliant policy. If you’re not enrolled, do so if you experience a qualifying event. Most people don’t take advantage of their qualifying events, perhaps unaware that their opportunity to enroll is limited.
Get Help Finding Affordable Coverage
Since 2015, we’ve helped thousands of clients enroll in cheap individual or family short-term medical, Obamacare, and life insurance plans in Tampa and all of Florida.
Get in touch with Star Nsurance + Tax today!
