Short-term health insurance plans are a really good alternative to the Obamacare plans available at Healthcare.gov. We’ll show you three reasons why below.
Before we do that, though, let’s answer the question. Are short-term health insurance plans Obamacare-compliant?
No. That is, because the plans are not “annually renewable” health insurance plans, they don’t have to meet all of the standards of the Affordable Care Act.
For many people, that’s a good thing (as we’ll see below). But it does mean that having only a short-term health insurance plan will make you non-compliant with the “individual mandate” in the law, so you could be liable for the penalty. (That penalty, though, is a lot less than the price of a compliant plan).
Here are three reasons you should consider a short-term health insurance plan anyway:
1. Short-term plans are much cheaper. Because these plans are, by definition, not in place permanently, the risk to the insurance company is lower, so the price is lower.
One consequence of the new mandates and requirements of the Affordable Care Act is that the price of individual health insurance plans has gone significantly higher. If you don’t qualify for an income-based subsidy from the government (or not enough of one to matter), that is obviously a strain on the budget. Short-term plans are a lower-cost alternative.
2. Short-term plans provide a solid safety net. Let’s be upfront here: Short-term health insurance plans are not fancy, but that’s OK. The main point of health insurance is to protect you from the big-time, catastrophic expenses that come when something big happens to your health.
A short-term health plan provides catastrophic coverage after your deductible has been met. That deductible can range from $500 to $5,000 or higher – the higher the deductible you choose, the lower your price. The plan we recommend does provide a $50 copay to visit an urgent care center, but otherwise you’ll pay for doctor visits and that sort of thing until the deductible is met.
3. Short-term plans are quick and easy to set up. Generally you could get a short-term health insurance plan that could be effective tomorrow. The process is quick and easy – no complicated healthcare.gov stuff, no income verification, none of the problems that so many people have experienced in Obamacare, and no waiting period for your policy to take effect.
Now, there is underwriting. That means that if you have certain pre-existing medical conditions, you could be turned down for coverage. You’ll also find that pre-existing conditions are generally not covered. So this approach is not for everybody.
But if you’re looking for a lower-cost alternative to Obamacare, a short-term health insurance plan (perhaps paired with telemedicine or an accident plan) is definitely worth your consideration.
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