Short-term health plans, provided by private insurers, offer coverage for a duration shorter than the typical year-long period of most major medical plans.
Clients might consider purchasing this type of coverage due to its fast approval process and affordable premiums. However, agents must recommend short-term medical plans under appropriate circumstances.
To determine the best scenarios and ideal clients for short-term health insurance, understanding the fundamentals of these plans, their eligibility criteria, and coverage details becomes essential.
Who Is Eligible for These Plans?
Short-term medical plans offer an excellent choice for individuals in need of coverage for a limited duration, seeking an affordable safety net, or requiring emergency coverage. These plans can be availed for periods as brief as 30 days or extended up to one year. Generally, clients eligible for most private health insurance plans are also eligible for short-term medical plans, although there might be some instances where eligibility could be restricted.
When discussing short-term health plans with your clients, it’s essential to keep a few key factors in mind. First, clients must be able to pass a straightforward underwriting process, and the costs may vary depending on their age, location, and the coverage level they select.
Who Isn’t Eligible?
Certain groups of individuals may not meet the eligibility criteria for short-term health plans. Eligibility standards can vary among different carriers, so it is essential to verify your clients’ eligibility status with the respective carriers before proceeding with the application.
The following individuals may not be eligible for short-term health plans:
- Non-U.S. citizens
- Residents of the following states: CA, CO, CT, DC, HI, ME, MA, NJ, NM, NY, RI, VT, WA
- Clients already covered under another major medical insurance policy
- Individuals who qualify for Medicaid
- Men weighing over 300 pounds
- Women weighing over 250 pounds
- Pregnant individuals
- Individuals who are HIV and AIDS positive
Residents of CO, CT, DC, HI, ME, NM, RI, VT, and WA are ineligible for short-term health plans as the strict regulations in those states have led to no insurers offering such plans. Additionally, clients in CA, MA, NJ, and NY cannot purchase these plans as they are banned in those states.
Pros of Short-Term Health Plans:
Short-term health plans serve as a valuable solution to bridge coverage gaps between enrollment periods or employer-sponsored plans, making healthcare more accessible and affordable for a broader range of individuals. With a multitude of carriers offering flexible options, you can easily find the right plan that aligns perfectly with your client’s specific needs and requirements.
These plans can be valuable options for clients who do not have complex medical concerns or pre-existing health conditions. These plans offer a safety net, providing some level of coverage to protect clients from high out-of-pocket costs in the event of a health emergency, rather than leaving them uninsured. The underwriting process is usually swift, ensuring that clients can obtain coverage in a short amount of time. Moreover, these plans offer flexibility, as they can be canceled without penalty whenever needed.
What Do Short-Term Health Plans Cover?
Short-term health plans do not cover all the services and appointments included in most major medical plans. They typically provide coverage for emergency room visits, certain prescriptions, limited doctor’s appointments, hospitalizations, and surgeries. However, there might be restrictions on the number of covered doctor visits, benefits (such as a specific daily hospitalization limit), or prescription drugs (with some prescriptions only covered for inpatients). By offering a more focused list of covered benefits, short-term health plans maintain affordability.
What Isn’t Covered?
Short-term medical plans do not include dental and vision benefits. Some of these plans may offer a drug discount card instead of comprehensive prescription drug coverage, providing access to certain medications at discounted prices, but without insurance reimbursement.
Due to the underwriting process, short-term insurance does not cover pre-existing conditions, maternity and newborn care, as well as mental health and substance abuse services. Clients might be denied enrollment in a plan if they do not pass a brief health survey. In such cases, an ACA plan from the state or federal marketplace might be a more suitable option.
What Clients Are Best Suited for This?
Those who are currently between jobs and no longer have employer coverage, urgently need insurance, and do not qualify for a premium subsidy through the marketplace due to their income level, may find value in short-term health plans. Additionally, young adults aging out of their parents’ plan might consider these plans as a temporary solution before purchasing a major medical insurance plan.
Individuals facing challenges finding affordable health insurance may also benefit from short-term health insurance. This includes those who missed the ACA Open Enrollment Period (OEP) and do not qualify for a special enrollment period (SEP). Furthermore, older clients waiting for their Medicare Annual Election Period (AEP) may find comfort in having a safety net of coverage provided by short-term health plans.
Clients exploring these plans should be aware of the maximum limits these plans offer. They cover only a specific number of expenses within a defined term, which ranges from one month to a year, with the possibility of renewal. If your client expects to have more significant medical needs, it’s worth considering a higher level of coverage.
Unlike Affordable Care Act (ACA) insurance plans, they are not obligated to meet the minimum essential coverage standards set by the ACA. Consequently, clients accustomed to traditional health plans may encounter unexpected coverage gaps when opting for short-term health insurance. Clients need to be aware of these differences before making a decision.
Consider adding short-term health plans to your portfolio to expand options and enhance value. If interested in selling short-term health plans, reach out to our team. We are dedicated to supporting you with difficult questions, unique solutions, and necessary resources.
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