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Short Term Health Plans: Short on Coverage, but The Price is Right

The Secretaries of the Treasury, Labor, and Health and Human Services have changed the ruling surrounding “Short Term Health Insurance Plans.” This announcement came August 1, 2018, via a fact sheet on CMS.gov. Short-term Health Insurance is designed to “fill the gaps” as individuals transition between jobs and other coverages. Currently, short-term plans are only available for 90 days. This new ruling will allow insurance companies to offer policies up to 364 days in length.

It is important to note that many short-term plans act more like catastrophic coverage. For example, they will not cover pre-existing conditions, may not pay for preventive medicine visits, maternity, or even sick visits. The purpose of many of these short-term plans is to provide some level of protection in the event of a hospitalization or a true emergency.

Often times the premiums for these plans are significantly lower than the Affordable Care Act (ACA) plans, but be sure to understand what you are buying. Monthly rates can be up to 50% less than ACA plans which can be very appealing, but they are not for everyone. These plans work well for people who have limited resources, are primarily healthy and don’t see a doctor often.

Also, since the Individual Mandate has been repealed for 2019, there will no longer be a tax penalty for individuals and families that do not carry an ACA health insurance plan. In 2016 the tax penalty for not carrying ACA health insurance could be up to 2.5% of your adjusted gross income.

Bottom line, if you are interested in looking into short-term health plans as a way to recoup some money you lost when you were forced to carry ACA health insurance, be sure to talk to an insurance broker that you can trust. You want a broker that will go over the fine print of these policies; what is covered and what will not be covered. Your broker also needs to ask some detailed questions about your health history and the health history of your family. No one wants to be surprised when it comes to insurance. But, if surprises or situations do come up, you want a broker on your side that will stand along side you and the product they sold you.

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