What Is Short Term Health Insurance?

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  Short Term health insurance (or Term Health Insurance) is medical insurance designed to provide coverage during the gaps between other health care plans. Many people will find that a Short-Term health insurance plan is a more affordable and flexible solution to their health care needs than an Affordable Care Act (Obamacare) plan.  

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What's Important to Know About Short Term Insurance?

Short Term health insurance does not prevent the Obamacare tax penalty.

 Because Short Term health insurance plans do not meet the requirements set by the Affordable Care Act, you will still be responsible for paying the tax penalty called the “Shared Responsibility Tax.”  

Short Term plans are not renewable, but instead require you to reapply if you wish to continue cover

 Part of the Affordable Care Act dictates rules for non-ACA plans. As a result, Short Term plans cannot be automatically renewed, and you will need to submit a new application.

You can be denied coverage due to pre-existing conditions.

  Like medical insurance before the ACA, Short Term plans can deny your application based on your current and past health conditions. Insurers will often probe up to 2 years of your health history.

Short Term plans are not required to have the same coverage benefits as Affordable Care Act plans.

 The Affordable Care Act established a very clear set of minimum coverage benefits called the “Ten Essential health benefits.” Since Short Term plans are not trying to be Obamacare plans, they will not necessarily fulfill these benefits.

Despite these downsides there are good reasons why a Short-Term health plan might still be the right choice.

Why Would a Short-Term Plan Still Work?

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  • Short Term plans can be cheaper than enrolling in an ACA plan even after you consider the tax penalty.

    In particular, those who do not qualify Obamacare plan subsidies will be hit by especially high premiums.
  • Healthy individuals won't have to worry about pre-existing conditions.

  • You can still get an ACA plan if you do develop a condition that prevents you from reapplying for a Short-Term plan.

    Affordable Care Act health plans cannot deny coverage for existing conditions. If you do develop a condition you might be out of luck for Short Term plans, but at least you rely on getting an ACA plan in the future.

  • Healthy individuals will not need to use many of the benefits provided by an ACA plan.

    As mentioned before, the ACA outlines a list of Ten Essential health benefits. Maternity services are one of these benefits and is required to be covered by Obamacare plans. As a simple example, a single male who buys an ACA plan will have maternity coverage that he’ll never need.

  • You might be unable to buy an ACA plan if you miss the Open Enrollment Period.

    If you are not enrolled in a plan before the Open Enrollment deadline, you won’t be able to purchase a health insurance plan unless you meet certain special requirements. In contrast, you can enroll in a Short-Term health plan at any time.

    The deadline to enroll in an ACA health plan was January 31, 2017. The enrollment period for 2018 ACA plans will be November 1, 2017 to December 15, 2017.

Who Should Consider Short Term Health Insurance?

  Short Term health insurance isn’t for everyone. People with certain chronic conditions or poor health might find that Short Term health plans lack the necessary coverage benefits for their healthcare needs. Additionally, people who have had a significant health event or medical condition in the past two years may have a hard time finding a Short-Term health insurance plan that will accept them with their pre-existing condition.