What is Short Term Health Insurance?

Short term health insurance definition

– Short-term health insurance also known as “Term Insurance” refers to a health insurance policy with a specified and limited time period, usually from a few months to a year. Health insurance for short term periods are aimed to benefit people who need to bridge the gap between longer-term policies with a temporary one.

Short-term health insurance coverage is usually less costly than traditional longer term insurance, however they do not cover pre-existing conditions. For people who acquire a longer term illness, this may be an issue as coverage for the acquired illness will terminate at the conclusion of the coverage period. With that being said, for the majority of people without pre-existing conditions, a term health insurance may be the best solution.

Since 2010, term health insurance coverage was not considered to be “adequate” under the Affordable Care Act making customers liable to tax penalties of being uninsured. The good news is that this tax penalty was eliminated under the Congressional Tax Reform Act beginning in 2019.

Additionally, where there was a 3-month term limit on these types of policies, this has now been extended to up to 365 days in most states, eliminating the previous term limitation.

There are many examples of where immediate short term health insurance may make sense for you to purchase.  Here are a few to consider:

You Need Cheap, Temporary Insurance

When life’s circumstances leave you without standard insurance coverage, a long term policy may be quite expensive. Term insurance will not typically provide coverage for pre-existing conditions, but they do cover the kinds of medical bills encountered by unexpected injuries, illness, or hospitalization.  Health insurance for short term periods provides financial protection from the unknown at a low monthly cost.

You are Hunting For a New Job

Searching for a job is stressful enough. The threat of needing medical treatment and dealing with the bills associated can compound that stress immensely. The low monthly costs associated with a term policy is a small price to pay in the short run to safeguard you and your family from the unexpected.

You are Waiting for Employer Coverage

New jobs typically have waiting periods that can take as long as 90 days until employer health coverage begins. Yes, sometimes these periods may only last only a few weeks, but why risk going uninsured? With the cost of most short term insurance policies being so minimal coupled with the financial protection they provide, there is no need to put yourself at risk.

You Missed Open Enrollment

Missing the Obamacare Open Enrollment deadline and not qualifying for a special enrollment period is a valid reason to consider purchasing short term insurance. Put simply, short term health coverage can provide the peace of mind you need from unexpected medical expenses. The idea is that you’re better off bridging the gap until you’re able to secure major medical insurance.

You Retired and Don’t Qualify for Medicare

If there is a short period of time between your retirement start date and being eligible for Medicare, you should definitely consider short term coverage. Paying for major health care expenses out of your retirement account is surely not the way to go. It is important to note, however, that health insurance for short term coverage may not be a suitable option for those with pre-existing conditions.