While the Affordable Care Act has ushered in an era of major-medical health insurance being available to most people in the United States, there’s still a role for Short-Term Medical (STM) insurance for those without a major medical plan.
What Is Short-Term Medical Insurance?
STM insurance provides coverage for periods from 30 to 360 days. It’s generally used as a stop-gap measure to prevent being totally uninsured while you’re between major medical policies.
You might use it while between jobs, while waiting for open enrollment on your state’s health insurance exchange, after you’ve enrolled in a major medical plan but you’re waiting for that plan to take effect or to bridge a few months between retirement and Medicare. STM policies aren’t renewable; you’re covered only for the stated time frame, and then the coverage ends.
Short-term policies are not ACA compliant plans.So unlike an ACA plan, a STM plan isn’t bound by an open enrollment period. However, STM policies will be subject to underwriting. Not only does this mean you might be refused a policy if you’re a bad risk, it also means the policy you’re offered may exclude coverage for preexisting conditions and have a maximum pay-out limit to the benefits. It also means the plan is not required to cover all of the ACA’s essential health benefits like preventive, mental health or maternity care.
This also means that STM plans do not satisfy the ACA’s mandate for individual shared responsibility. Therefore, you may be required to pay a tax penalty for being uninsured even though you have a STM policy.
Because STM plans have more restrictive benefits and insurers can limit their risks with good underwriting, these policies can be less expensive than an unsubsidized major medical plan. These plans can usually be tailored to fit your needs and budget by choosing from different deductibles, coinsurance levels and even adding riders for accident or critical illness.
For help determining if a Short-Term Medical plan is right for you, give one of our agents at Ohio Health Benefits a call.
SOURCE: 1 – about.com Elizabeth Davis