5 Differences Between Long and Short-Term Health Insurance
Short vs. long. Medical vs. life. Temporary vs. full. Term vs. whole. Health insurance vs. disability. Home, auto, and travel. The insurance options can become overwhelming. While we cannot clear up all the confusion in one article, let us explain the difference between short-term or term policies and long-term or whole options.
Short-term health insurance offers coverage in the absence of long-term insurance. Situations in which you may need short-term insurance include:
– A job loss or the state of being between jobs
– The waiting period required by an employer or government-based health plan
– The open enrollment deadline passed
In these cases, short-term insurance (sometimes referred to as gap insurance) covers your medical expenses for a period. However, the differences between short and long-term options are worth paying attention to, so you do not face any unpleasant surprises.
Even the options for short-term coverage vary. Check the details of any policy before committing to a purchase. Talking with a licensed insurance agent helps you sort through the offerings and identify which works best in your situation.
Let’s compare.
Short-Term vs. Long-Term Insurance
The differences between long and short-term health insurance prove significant. Understanding the variations helps you choose a policy which fits your situation. Take your pre-existing health issues, potential near-future medical needs, other living expenses and current job status into consideration as you shop.
1. Time Constraints
Unlike long-term insurance, short-term (known as temporary) options are limited to a period. Twelve months is typically the maximum coverage on a short-term policy. Some policies require a three-month minimum.
Also, these plans are not renewable. Once your set coverage ends, you are uninsured. You may apply for a second short-term insurance to give you longer protection. However, even this option limits you to enrolling in only two policies per year.
2. Flexibility
With coverage ranging from 30 days to a year, the length of a short-term policy is up to you. You pay for the protection you want. If you need six months of coverage until your next employer’s medical plan kicks in, you only pay for six months. If it takes twelve months to find a job and secure insurance, you have the option.
Furthermore, short-term insurance tends to require a quick application and be approved quickly. This proves especially helpful in cases where your previous policy ends unexpectedly. A job loss is one such case. You may discover you get coverage as soon as the day after you enroll. Plus, you do not need to wait for an open enrollment period. Short-term policies are available year-round.
3. Expense
Gap insurance policies offer lower premiums than long-term policies. The reason for this cost-effectiveness, however, is the limits in coverage. The purpose of these policies is to protect you and your family in the event of unforeseen accidents and illnesses. Your basic medical needs and emergencies get covered, not much else. Pre-existing conditions, preventative treatments, and prescriptions often fall outside the scope of temporary insurance plans.
Also, medical underwriting may reject you from coverage due to an unhealthy lifestyle or current health conditions. While long-term insurance policies protect you from such rejection through Affordable Care Act (ACA) requirements, short-term options are not expected to adhere to such rules. These limits reduce costs.
4. Pre-Existing Conditions
As mentioned, short-term policies do not cover pre-existing conditions, as their long-term counterparts do. Keep this in mind when considering a gap policy. If you have a pre-existing condition (and, most of us do), weigh the cost of the insurance. A short-term option provides reassurance in the event of the unexpected. However, adding the medical costs of treating your pre-existing condition to the monthly premiums may not be wise.
5. ACA Requirements
The ACA dictates the qualities of health insurance policies. The goal is to provide affordable healthcare to all people. However, the requirements laid out by ACA only apply to long-term policies. Gap insurance falls outside these mandates. For you, this means that the ten essential health benefits ACA plans must cover do not apply to short-term insurance. Typically, sudden illness and injury coverage provided by emergency services are covered, nothing else.
Your Choice
Both short and long-term insurance options come in a variety of packages with a range of costs. Know your situation and your real and potential medical needs clearly as you consider different policies. Investigate the details of each policy to understand what your dollar is buying. Get a clear understanding of the monthly premium, deductible, out-of-pocket expense and the conditions covered. (Remember, medical costs skyrocket in the absence of insurance.) Then, compare the two.
Using wisdom when choosing an insurance plan protects you and your family in the short and long-term. Do your research. Contact a knowledgeable agent. Weigh your options. And, choose wisely. The best insurance is the one which fits your situation and meets your needs.
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Category: Health Insurance