A Perspective on Short-Term Health Insurance

Let’s remember: healthcare and health insurance are not the same thing. To be sure, we need both. But, it’s important to keep in mind that both your healthcare and your health insurance should be personalized and tailored to fit your unique needs and objectives. One size does not fit all.

Your healthcare decisions – beginning with choosing the right primary care physician – should be fundamentally driven by your health and health goals. What health providers (including primary care and others) give you the best chance of optimizing your health and well-being?

The same kind of thought process applies when researching, evaluating, and selecting health insurance. How much coverage should you have and what kind of coverage should that be? How can you insure yourself against a medical cost catastrophe without over-insuring or breaking the bank? What kinds of insurance plans and options are accessible to you? Are alternative options – like Medical Cost Sharing plans – a reasonable possibility for you and your family?

You get the drift. One size of health insurance does not fit all.

The U.S.’s recent changes to short-term insurance policy

Many of the millions of us who do not have access to employer-provided health insurance are keenly aware of the Affordable Care Act (ACA/Obamacare) and the exchanges and mandates that go along with it. We are also keenly aware of subsidy restrictions and rising premiums. The term “affordable” simply does not apply for many of us.

The U.S. Departments of Health and Human Services, Labor, and Treasury have recently announced that the rules for short-term health insurance will be expanded, loosened, and adjusted. That’s welcomed news for many. The removal of the individual mandate, which taxes those who did not maintain an ACA type of health plan, may also be good news for many, but not everyone.

Short-term health plans are nothing new. They’ve been around for a while, mainly in the form of indemnity plans. Prior to the ACA, short-term indemnity plans were offered in 3 month, 6 month, and 1 year increments. The ACA capped short-term plans at 3 months and then mandated the purchase of ACA coverage.

That changed earlier this month. The new plans – available as early as October of this year – will allow people who do not have employer-provided insurance to purchase short-term health insurance at prices that may be considerably less than ACA coverage. Considerably less.

Some of the positive highlights of the new health insurance changes:

    There are NO narrow networks, which is typical of indemnity plans. There are no contracts with specific doctors or hospitals, enabling you to seek medical attention wherever you please.

    Premiums are predicted to be much, much lower. This will be particularly beneficial to younger (healthy) consumers, healthy people of any age, healthy people who have been unable to afford insurance in the past, and perhaps people who are between jobs and need a little coverage until their next gig.

    There is NO enrollment period. This is a big change. You may sign up at any time unlike most insurance plans (including those offered by Obamacare) where enrollment periods are strictly regulated.

    Coverage begins almost immediately.

Sounds great, right? It may very well be for some of us. If it works for you, fantastic! Take full advantage! But remember, one size does not fit all.

Health and Human Services (HHS) does not claim that these plans are the same as those offered on the exchange. In fact, James Parker, a senior advisor for health reform at HHS, recently stated on a conference call with reporters, “We make no representation that it’s equal coverage.”

Some things to be aware of from the policy changes include:

    Pre-existing conditions will likely disqualify you. Practically any chronic condition (cancer, diabetes, high blood pressure) will work against you. So will a history of unhealthy habits like smoking and excessive alcohol or drug use.

    The Affordable Care Act mandated that insurance providers cover what the government determined to be essential benefits. That does not apply to these short-term plans. These plans won’t cover things like maternity care, mental health, preventive exams, prescription medications, vaccinations, or tests and screens. Be aware.

    The ACA included regulations to protect consumers. Those consumer protection regulations do not exist in these short-term plans. Rescission – or, retroactively rescinding coverage at the whim and whimsy of the insurance carrier – is an example. Again, beware.

    There are no limits on out-of-pocket costs or lifetime costs.

    While these short-term plans are available to people for up to 3 years, you have to reapply each year. They are not renewable from year to year.

So, generally speaking, it will be the younger, typically-healthier people who will likely benefit most from this new policy. It’s really good news for them – and some others of course – and they will likely abandon the ACA individual marketplaces in droves. While it remains to be seen, this transition may mean that an older, less healthy group will be left behind. That’s bound to have an effect, right?

What should you do next?

Research and evaluate options. Be aware and informed. Make the best possible decisions available and accessible to you. And remember (dare I say it again?), one size does not fit all.


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