To date many of our clients have chosen not to take traditional, individual health insurance plans that comply with the Affordable Care Act (ACA) but instead have chosen a different, more affordable option. That option, short-term health insurance, is now available in many states for coverage periods of up to 11 months on a single policy with the option to apply for additional policies when the original policy expires.
Now, in all fairness, this is not a true “apples to apples” comparison.
The ACA plans:
The ACA plans:
- Guarantee acceptance to all applicants
- Provide coverage for pre-existing conditions, pregnancy, and preventive care
- Have no limit on the benefits payable under the policies.
The short-term plans:
- Require answers to several brief medical questions in order to qualify
- Do not provide coverage for pre-existing conditions, pregnancy, or preventive care.
- Place limits on benefit maximum of $1,000,000 to $2,000,000 depending on the plan.
They also do not satisfy the government’s requirement for minimum essential coverage which means that the covered individual could be subject to the fine for not having “compliant” health insurance. An income of $40,000 equates to a fine of about $1,000 a year or roughly $84 per month. Still, when added to the plan premium that’s approximately $205.00 per month compared to $413.78 for the Obamacare plan.
Not a solution for everyone, but for healthy individuals who use their health insurance infrequently it has been an attractive option. Until now. Once the government realized that some folks were opting for short-term health insurance instead of “government approved” insurance they passed a rule effective April 1st of this year that will only allow the sale of short-term health insurance policies of up to 90 days of coverage. No re-applications permitted.
Therefore, unless this new rule is amended or reversed, short-term medical plans that offer up to eleven months of coverage will only be available through March 31st. After that the maximum policy duration will be 90 days of coverage.
If you are uninsured, or if you are having a hard time paying for your ACA “approved” health insurance plan you may want to take action between now and March 31st.
A short-term plan could be an option for you if you:
- Are turning 26 and losing coverage under your parents’ policy
- Are a college student or a recent graduate
- Are not being treated for a pre-existing condition
- Have a gap in employment that you know will close in a short period of time
- Have no health insurance or are about to lose coverage because of loss of employment, divorce, relocation, or your employer’s company is going out of business
- Missed your employer’s annual enrollment period
- Are in your probation period before insurance begins at your new employer
- Need an affordable alternative to COBRA coverage from a former employer
If a short-term health insurance plan sounds like it may be a good option for you contact us soon at (800) 955-0418 so you avoid the March 31st deadline. Thanks for reading.
Alan Leafman, President