When you’re between health plans, enrolling in temporary medical insurance can help keep you covered.
When you’re between health plans, you can stay covered by enrolling in temporary medical insurance. This is a type of short-term coverage that can help protect you against accidents and major illnesses as you transition between life events or until you can enroll in a new plan.
If you’re interested in learning more about short-term medical insurance, contact HealthMarkets. We work with over 180 insurance providers nationwide to provide a unique portfolio of products that can match your health and budget needs.
You don’t have to shop for coverage alone. We have over 3,000 local, licensed agents available to walk you through your options and help you enroll in the right plan. We’ll let you know all about your benefits, subsidy eligibility, and offer helpful advice you need to choose the right plan—and we’ll do it all at no cost to you.
What is Short-Term Health Insurance?
Temporary health insurance is an inexpensive option if you are going through a short gap in your health insurance coverage. Plans can usually be purchased outside of the Open Enrollment Period for policy lengths of 30 days to 12 months.
It’s similar to catastrophic coverage in that it focuses on protecting against unforeseen accidents or illnesses. Certain plans can also work to fill the gaps in your existing coverage. Due to this, you may not receive the same benefits and coverage with a temporary plan as you would with an ACA-qualified plan. In addition, temporary plans do not fulfill ACA requirements. So, they will not protect you from tax penalties if you do not find an ACA qualified plan.
Short-term health insurance can be beneficial for those who are:
- Transitioning between jobs
- Waiting to be enrolled in a group plan by your new employer
- Recent college grads
- Transitioning to a new health plan from being a dependent on another plan
- Leaving your current job and losing their coverage
Short-Term Coverage Gap Exemption
If you have recently lost or left your health insurance plan, you have a limited amount of time — known as a “short gap” — where you can be uninsured without having to pay a tax penalty.
Under the Affordable Care Act (also referred to as the ACA or Obamacare), it has become mandatory for most Americans to be enrolled in health insurance. But during a short gap, you have time to find a new plan as soon as your old one ends.
The Individual Mandate was introduced with the ACA as a way to encourage Americans to obtain health insurance. The tax penalty applies to Americans who are required to purchase coverage. However, there are exceptions to this rule. Those who qualify for the tax penalty exemption include:
- Americans with religious objections
- Native Americans enrolled in coverage through the Indian Health Services
- Undocumented immigrants
- Americans without coverage for less than three months (in the short gap)
- Americans serving prison sentences
- Americans whose lowest cost plan option exceeds 8 percent of their annual household income
If you don’t find coverage during the three-month short gap period, and you aren’t eligible for an exemption, you may face paying a penalty. In 2016, the tax penalty is $695 per adult and $374.50 per child (totalling up to $2,085 per family), or 2.5 percent of the total annual income, whichever is higher.
This penalty is expected to increase with each year. So, it’s crucial that you find health coverage before your family faces a heavy fine for remaining uninsured.
What to Know About Having Temporary Health Insurance
If you’re considering a short-term health plan, it’s important to understand the advantages and disadvantages that come with this type of coverage. Inc. Magazine provides an excellent breakdown of the “good, bad, and ugly” of temporary insurance:
- They limit what services they’ll cover, and for how long: “There's a reason short-term plans don't qualify under the Affordable Care Act (and why you'll still have to pay a penalty for lack of coverage): such policies tend to only cover major health crises. What's more, they're only available for one-month windows, for up to a maximum of one year, or as little as three months.”
- Your health history can be a reason for declined coverage: “If you elect to apply for short-term health coverage, it’s feasible that you could be denied. The policies tend to require medical underwriting … Long-term coverage plans that qualify under the Affordable Care Act, by contrast, cannot deny you coverage based on your medical history.” This means that short-term health insurance policies can be denied to individuals who are considered to have pre-existing health conditions, or who have a health problem prior to the date your new coverage is expected to start.
- The millennial generation has become more interested in this type of coverage: “With all of the potential downsides to short-term health coverage, the policies are attractive to a few key groups. People who failed to apply for coverage during the Open Enrollment period, for instance, often go for gap coverage if they decide they want some form of health insurance after all, as do individuals who don’t qualify for the law’s premium subsidy or Medicaid.”
- Short-term plans don’t cover maternity leave: “It’s also worth noting that gap policies often don't account for maternity leave if you or your spouse becomes pregnant. They also might not cover prescription drugs.” Those with temporary coverage don’t usually receive the same benefits—like preventive care, for example—than those with long-term coverage.
When Do You Need Temporary Health Insurance?
Short-term health insurance isn’t always necessary. If you have a major, life-changing event and are outside the Open Enrollment Period, you may be eligible for a Special Enrollment Period. This enrollment period may occur at any time during the year and allows you to shop for a new healthcare plan without risking paying the penalty.
The Special Enrollment Period is open for 60 days from the moment you become eligible. Eligibility is dependent on whether your situation is considered to be a Qualifying Life Event.
Qualifying life events can include:
- Marriage or divorce
- Having or adopting a baby
- Death of a dependent enrolled in your health plan
- Changing or leaving your current job
- Changing citizenship
- Government error
- Relocating to a new address, city, county, or state
If you aren’t eligible for a Special Enrollment Period, then you still have the three-month short-gap period where you can look for short-term medical insurance to protect your family from unexpected medical expenses.
Is a Temporary Medical Plan Right for You?
It’s important to consider the unique health and budget needs of your dependents before enrolling in any health insurance plan—short- or long-term.
U.S. News provides some insight on who may benefit more from a short-term medical plan:
“Short-term plans do have a place and may be a good option for certain healthy people, experts say. College graduates, no longer able to get coverage on their parents' plans, may elect these to tide them over until a first job with benefits starts, for example; so too might folks who are waiting to be approved for a permanent major medical plan or those who have a new job lined up that requires a waiting period before group health insurance can begin.
However, experts tend to advise against short-term plans for people who have lost a job, unless they have definite coverage options ahead or understand the pitfalls.”
If you’d like to know more about your options with long-term and temporary medical insurance, contact HealthMarkets. Our licensed agents are available to help you understand what type of health insurance plan would benefit you during this life transition. We can help you learn about your options, subsidies, and more.
"Exemption information if you had a gap in health insurance — CMS.” | Individual Mandate — NFIB.” | "The Requirement to Buy Coverage Under the Affordable Care Act — KFF.” | "5 Things to Know About Short-Term Health Insurance — Inc.” 2015. | Caarns, Ann. “Short-Term Health Insurance Attracts Many Despite Drawbacks.” The New York Times. 5 Jun 2015. | Lyon, Lindsay. “Don’t Get Short-Changed by Short-Term Medical Insurance.” US News & World Report. 11 Mar. 2010. | "Don’t Get Short-Changed by Short-Term Medical Insurance — U.S. News.” 2015.