Is Short Term Health Insurance Legitimate?

The short answer is YES. 

The question is asked because short-term health insurance is so much cheaper than non-subsidized health insurance plans in Obamacare.

Let’s be clear: A good short term health insurance plan will provide good, comprehensive major medical coverage. In other words, it will protect you from unforeseen, catastrophic healthcare costs. With a short-term health plan, there’s a cap on what you’ll have to pay for care. And isn’t that ultimately the point of health insurance?

That’s why I say yes – short term health insurance is legitimate insurance coverage.

So the next question:

Why is Short-Term Health Insurance Cheaper than Obamacare?

Here are a few reasons short-term health coverage is cheaper, presented in random order:

  • Length. Not to be Captain Obvious here, but there is a defined length of time a short-term health plan will be in force.

 

  • Prescription drugs. Short-term health insurance plans typically don’t cover prescription drugs (and this is a big driver of cost in health insurance). Instead, you would get a discount on drugs, but they wouldn’t count towards your deductible and out-of-pocket limits.

 

  • Pre-existing conditions. This is the biggie. Short-term health insurance policies do not cover pre-existing conditions, which will obviously make them less than ideal (or maybe impossible) for many people.

 

  • No maternity coverage. This could also be a big deal for some people, but a short-term health plan won’t cover maternity expenses. In fact, if you’re pregnant you won’t be able to get coverage at all.

 

  • Non-guarantee issue. This is a technical way of saying that a short-term health insurance plan won’t accept everybody for coverage. They can decline to offer coverage to someone based on their medical history. So if you’ve had cancer in the last five years, for example, this probably won’t be an option. (Note: We know of one insurance company that will offer coverage to anyone – regardless of medical history – but they won’t cover pre-existing conditions).

 

What’s the Point of Short Term Health Insurance?

With those limitations in mind, we certainly know it won’t be a great option for everyone. But if you’re generally pretty healthy and want coverage against unexpected health care costs, a short-term health insurance policy is a very good and cost-effective way of doing that.

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