Depending on whom you ask, short-term health plans are either a much-needed alternative to the high prices of the federal health insurance marketplace, or junk plans posing as real health insurance.
Either way, the price of short-term health plans — about half as much as a the cheapest plans sold on Healthcare.gov, according to Agile Health Insurance — makes them an attractive option for people looking for low-cost health coverage. But that price comes with many limitations. Shoppers need to do their homework before selecting a short-term plan. Here are a few questions you should ask if considering one.
1. What do short-term plans cover?
It might be better to first address what short-term health plans don't cover. Former President Barack Obama's health law required health insurance plans to cover 10 essential health benefits, including trips to the emergency room, pre- and post-natal care and prescription drugs.
Short term health plans aren't required to cover all 10 benefits. They provide coverage for doctor visits, emergency room visits, lab tests and other services, but with limits. And they can deny or limit coverage based on health history. If you have a pre-existing condition like diabetes, it may affect your ability to buy coverage.
2. Can I get help paying for Obamacare?
Because Obamacare plans cover more, you may want to check plans out on Healthcare.gov first. Federal open enrollment for 2019 runs through Dec. 15, though some state health insurance marketplaces are open longer. While the sticker price for marketplace plans may be higher, many people qualify for subsidies that make Obamacare plans cheaper.
Note: If you miss the Dec. 15 deadline, you'll have to qualify for a special enrollment period to sign up for Obamacare.
Need help finding health care? Here's a step-by-step guide to shopping for health insurance during open enrollment 2019.
3. Do I qualify for Medicaid or Medicare?
You may also be able to qualify for government-provided health care. Medicaid is a federal- and state-run program that covers many low-income people, though eligibilty varies by state. Check our guide to see the rules where you live.
Medicare is primarily for older Americans. You automatically qualify when you turn 65. Medicare also covers younger Americans with certain disabilities.
4. What are my health needs?
Short-term health plans are best-suited for healthy people with few health expenses. If you need treatment for a chronic condition or expect to get pregnant, you may want to consider a more comprehensive option.
Remember: Short-term plans generally don't cover pre-existing conditions. If you have a health condition before buying a plan, chances are, treatment for it won't get covered.
5. How much will I pay?
We mentioned that short-term plans have lower premiums. But like standard health insurance, short-term plans often come without-of-pocket costs: Deductibles, coinsurance and copayments.
When budgeting your health costs, take these additional costs into account. Check for each plans' out-of-pocket maximum. (You can compare and shop for short-term health plans with our partner Agile Health.) In normal health insurance, this represents the most you can expect to pay in a given year. But short-term health plans also have a coverage period maximum.
Let's say your short-term plan's out-of-pocket maximum is $5,000. If you break your leg, the plan will pay for any costs above $5,000 — until you hit the coverage period maximum, in which case you're on your own again.
For many plans, the maximum is as high as $1 million, but a catastrophic illness like a cancer diagnosis could easily push your costs above that.
6. What are the plan's limits?
Aside from coverage maximums, short-term plans come with a host of exclusions and limits. Policies should list these exclusions, and you should comb the fine print carefully.
Common exclusions include pregnancy, mental health treatment and injuries from "hazardous activities" like rock climbing or bungee jumping.
Individual services, like hospital stays, may also have dollar limits. For example, if the plan has a $2,000 limit on hospital stays, any amount more than that is your responsibility.
7. Where are short-term plans available?
Some states have placed limits on how long short-term plans last. California, Hawaii, Massachusetts, New Jersey, New York and Oregon ban them altogether.
8. How long do they last?
Contrary to their name, short-term plans can last up to a year and the same plan can be renewed up to three years (depending on state law). Prior to 2018, short-term plans only lasted three months. Given their limitations, it may be better not to rely on them long-term, but instead as a way to fill the gaps when you can't get comprehensive coverage.
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