A Basic Explanation
Imagine you’ve lost your job and your health insurance right along with it. Luckily, you find a new job quickly—but your new coverage doesn’t start for months (and COBRA would be very expensive). What if you get sick or injured during that time?
Short-term health insurance can help pay your medical bills during brief gaps in traditional coverage. It may also be a good option if you’re uninsured for other reasons and unable to sign up for traditional coverage.Typically, short-term plans are for 6 to 12 months, though some offer coverage for as few as 30 days.
Expert Advice About Short-Term Health Insurance
Short-term coverage is great in a pinch, but benefits will be limited. Most short-term plans don’t cover all 10 essential health benefits (such as physical exams, immunizations, and other preventive care) that must be included in Affordable Care Act (ACA) plans. And provider networks are generally narrow, so you’ll have fewer choices for covered doctors and facilities. While a short-term plan is good for bridging gaps, it won’t replace comprehensive coverage.
Short-term plans tend to focus on providing coverage in the event of unforeseen accidents or serious illness, and offer at least some protection against huge medical bills. These plans are usually more affordable than COBRA continuation coverage, so if you qualify, it may be a smart choice.
Unlike marketplace plans, you can be turned down for short-term coverage. Short-term plans don’t cover pre-existing conditions, so an insurer can reject you based on your health status or medical condition, or even your age.
You can’t use tax credits to help pay the premiums. And not only that, because short-term insurance is not considered minimum essential coverage (which the ACA requires everyone to have), you risk paying a penalty when you file your next tax return if it’s the only coverage you have.
Still, having some insurance—even if it doesn’t cover everything—is better than nothing.
What Else You Need to Know
Your enrollment application will usually be approved quickly. That’s the good news. However, if you buy a plan and you want to renew it, renewal is not automatic. You’ll need to reapply when the plan ends. And even if your renewal is approved, you may not be offered the same plan for the same price.
Plan your transition to other insurance carefully. If your short-term insurance expires outside of open enrollment, you might not be able to sign up for a traditional, comprehensive plan (unless you have a qualifying event, such as a job change, marriage, or move to a new zip code, which would trigger a special enrollment period and you would be able to enroll). If you’re not eligible for a special enrollment, you could be left without any coverage options.
If your plan ends during an open enrollment period, you’ll be able to enroll in a new plan right away. When you enroll be sure to check your coverage start date.