Temporary health insurance covers basic health care expenses for short periods of time.
These policies cover major medical costs, but not annual check-ups or well visits. They’re meant to protect you in the event of a medical emergency.
Are you considering a temporary policy? If so, you’ll want to make an informed decision. To learn more about when these policies are helpful and their pros and cons, read on.
What is Temporary Health Insurance?
Temporary health insurance is also known as short-term health insurance. It’s coverage you can purchase for short periods of time. Most of these plans limit your coverage to six months or less.
These temporary policies are also called gap plans. This is because they can be helpful when you have gaps in your traditional coverage.
Temporary insurance’s main purpose is to safeguard the policyholder. It covers medical bills from an unexpected illness, medical emergency, or hospitalization.
The Pros of Temporary Health Insurance
As with anything, there are both good and bad aspects to keep in mind. There are some pluses to consider with this type of insurance policy.
You Can Purchase at Any Time
With temporary health insurance, you can buy a policy whenever you need it. There’s no need to wait until open enrollment. Coverage begins as soon as you’re accepted.
If you miss open enrollment, you can buy regular plans until the next open enrollment period. For some, that would mean going without insurance for a long time.
Temporary insurance policies can be purchased any time of the year. This is helpful if you’ve missed open enrollment. It’s also useful when you find yourself without health benefits.
Temporary policy premiums are usually much lower than regular policies.
While a cheaper premiums are a plus, it’s not quite as good as it may sound. There are fewer benefits and heftier deductibles with these short-term policies.
More Doctors and Hospitals
Temporary health insurance plans may have bigger networks than other policies.
Limited choices for healthcare providers can be frustrating with insurance policies. Temporary policies tend to have a broad network of doctors and hospitals. This gives you more freedom to choose who will provide your care.
Temporary insurance helps protect you during gaps in regular health care coverage.
There are downsides to using a short-term policy that you should consider when deciding what type of insurance is best for you.
Pre-existing Conditions and Pregnancy Not Covered
Temporary insurance plans usually will not cover pre-existing conditions. This is a major disadvantage to those who need coverage to afford regular medical care.
These plans usually don’t cover medical expenses or prescriptions related to pre-existing conditions. Insurance companies may deny you altogether because of your health history.
This medical underwriting can’t be done with plans that are Affordable Care Act-compliant.
Most temporary health insurance plans won’t cover prenatal care for pregnant women. They won’t cover delivery and hospital expenses or maternity leave either.
Also, you may not qualify for coverage at all if you or your spouse are pregnant.
Does Not Meet Standards of Affordable Care Act
The Affordable Care Act requires certain levels of coverage and benefits from insurance plans. These temporary plans don’t meet ACA standards for qualification and coverage.
You may be subject to tax penalties for selecting these insurance policies.
Limited Coverage for a Limited Time
Because these plans are only meant to be temporary, the duration of coverage is generally brief.
Different plans offer coverage for spans of one month, several months, and six months. Some will cover up to a year.
These plans aren’t meant for anyone who needs coverage for chronic conditions. They often don’t cover any sort of care or prescription medication for ongoing health problems.
Temporary plans, with their high deductibles, are basically a safety net in the event of a major medical crisis.
You Must Renew After Each Expiration
Temporary plans must be renewed after each period of coverage ends.
This means you must reapply for coverage after they’re expired. You’ll be subject to the same medical underwriting as before. There’s a possibility that they’ll deny you coverage, even if you qualified previously.
You’re Penalized for Previous Claims
If you’ve purchased a temporary plan before and had to make a claim because of a serious medical event, it’s likely that an insurer will deny you coverage when you reapply.
If you do qualify when you reapply, the insurer may exclude benefits for any kind of care related to your previous claim.
Who is Buying Temporary Insurance?
Traditionally, temporary insurance plans were purchased to cover gaps in traditional coverage that were due to:
- Changes in employment resulting in a gap before new employer’s insurance kicks in
- Periods of unemployment
- Recent college graduation
Temporary plans were designed to be used in times of transition. However, the introduction of the Affordable Care Act has changed the way this insurance is used.
The ACA has been beneficial to many, such as those who participate in Medicare enrollment, but it has had a different impact on others.
While the ACA requires that policies have certain benefits and coverage, affordability has been an issue for many.
If a person’s income doesn’t qualify them for a tax credit to help pay for ACA-compliant insurance, the premiums are often pricey.
Those who don’t get helpful subsidies find monthly insurance costs to be a financial burden.
For this reason, many people who are generally healthy but want a safety net in case of a catastrophic health event are considering short-term policies. A tax penalty is often not enough of a deterrent to make these people consider major medical plans.
Also, those who miss the open enrollment period will turn to temporary plans so they’re not left unprotected.
If you’re among the many consumers that are considering purchasing a temporary insurance policy, make sure you’ve weighed the pros and cons of this type of coverage. It’s not meant as a permanent solution, but it will help you when you find yourself in need.
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