Short-Term Health Insurance: What It Covers & Who Should Get It

Medical care in the United States is expensive, and losing your health insurance is a frightening prospect. Bills can pile up quickly if you suddenly become ill or have an accident. One feasible option, short-term health insurance, can help you bridge this coverage gap without devastating financial consequences. We've put together everything you need to know about temporary coverage, including what short-term health insurance is and who it benefits.

What Is Short-Term Health Insurance?

Short-term health insurance is a type of health plan that provides temporary medical coverage. It serves as a bridge between long-term plans and provides protection when regular insurance is unavailable.

Who Offers Short-Term Health Insurance?

Several major insurance companies nationwide offer short-term health plans. Their policies often differ by state. Not every insurer provides temporary coverage options.

In addition, you can't purchase a short-term policy through the Affordable Care Act (ACA) marketplace. Unlike typical insurance plans, short-term health insurance policies don't have to comply with ACA requirements, such as providing minimum levels of coverage.

How Short-Term Coverage Works

People often purchase short-term insurance when they are between health plans, waiting for an enrollment period to open, or need coverage in case of an emergency. Under federal law, coverage cannot extend beyond four months. A short-term plan is sometimes a good option when you're waiting for your coverage to start, either because you purchased a plan through the ACA or took a new job.

What Does Short-Term Health Insurance Cover?

Short-term health insurance is often more limited than a regular plan, and coverage differs widely based on the plan and insurance company. It may cover preventive care, urgent care, and prescriptions. Most commonly, it pays for emergency treatment, including hospital stays and surgical procedures.

Short-term coverage usually doesn't apply to pre-existing conditions, and it may also have these exclusions:

• Checkups, vaccinations, and routine screenings
• Mental health care
• Substance abuse treatment
• Maternity care
• Chronic conditions

Short-term policies generally don't cover these treatments because they are ongoing or relate to a previously diagnosed condition.

Eligibility and Enrollment Process

Many people are eligible for short-term health insurance, but requirements vary by state and insurer. For example, many insurance companies only offer temporary coverage to people under age 65 without disqualifying conditions.

If you're eligible, enrolling in short-term coverage is usually a quick process because it doesn't require a health questionnaire. Most insurers don't have open enrollment periods for short-term insurance. They instead allow you to apply at any time during the year.

The specific steps to enroll and qualify for short-term coverage ultimately depend on where you live. Some states, including California, New York, New Jersey, and Massachusetts, don't allow insurers to offer short-term plans.

How Much Does Short-Term Health Insurance Cost?

The price of short-term health insurance depends on the coverage and deductible. The premium, or monthly fee, for a short-term health insurance plan could be as low as $50 to $100 a month, but a plan at this price point may have limited coverage and a large deductible. On average, the monthly cost of short-term health insurance is approximately $208.

When comparing insurance prices, consider any copays and deductibles. In addition, some plans have out-of-pocket maximums, limiting how much you have to pay before the insurer fully covers your expenses.

Pros and Cons of Short-Term Health Insurance

Short-term health plans are a valuable solution for some people, while others find they don't offer the necessary coverage. Consider carefully whether a temporary plan offers the essential health benefits you need.

Benefits of Short-Term Coverage

Short-term health insurance is accessible and easy. Many insurers offer instant approval rather than making you wait for weeks for a response, and your coverage begins within a matter of days.

Short-term coverage is also flexible, usually allowing you to apply and enroll at any time rather than waiting for a specific enrollment period. You can decide how long you want coverage and cancel your policy at any time.

Alternatives to Short-Term Health Insurance

Short-term health plans also come with significant drawbacks:

• Coverage is often limited compared to ACA-compliant plans.
• Insurers generally exclude pre-existing conditions.
• You can only keep it for a few months.

Other options instead of short-term insurance include obtaining an ACA marketplace plan, which offers comprehensive coverage and subsidies for some applicants. If you recently lost your job and had insurance through your employer, you may also qualify for COBRA, a temporary continuation of your previous coverage. Low-income individuals often qualify for state-run insurance programs with affordable or free insurance, such as Medicaid and CHIP.

A health discount card is another tool to keep costs down, which gives you a discounted rate on certain medical services and prescriptions. You can also follow saving tips to help with potential healthcare expenses and withdraw money as medical needs arise.

Who Should Consider Short-Term Health Insurance?

Whether you should apply for short-term insurance depends on your specific circumstances. For example, suppose you're not working because of an injury or illness. In that case, the availability of short-term insurance depends on who pays health insurance while on short-term disability — you or your employer. If you must provide your own insurance during this time, a short-term policy may be an option.

Generally speaking, short-term health insurance may be a good fit in these scenarios:

• You recently left one job and are trying to find a new one.
• You missed the open enrollment period for ACA marketplace plans.
• You're waiting for your Medicare coverage to begin.
• You're retiring early and don't have access to Medicare yet.

Short-term insurance plans probably aren't the right choice if you have one or more chronic conditions requiring regular treatment. Additionally, a short-term plan won't pay for any of your maternity expenses if you're pregnant.

Making the Right Decision With MoneyAtlas

Health insurance is crucial to ensuring you have access to the medical care you need, and a temporary plan can carry you through major life changes. When you want to find the best short-term health insurance, discover the best life insurance options, or review your home insurance needs, turn to MoneyAtlas. Our expert insights into insurance coverage can help you make an informed decision to protect your health now and in the future.