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Who Is the Ideal Candidate for Short Term Coverage?

Some people can save quite a bit of money with short term coverage.

 

and remain protected!

 

The use of short term health insurance has roughly doubled since 2014.

and for good reason.

 

The core "permanent" plans or ACA compliant plans have seen rates go up 2-3 times since then.

The types of people attracted to short term generally fall into two categories, both equally served by this type of coverage.

 

People looking for cheaper options that than the permanent plan:

  1. missed open enrollment
  2. cannot afford the permanent coverage
  3. looking for more catastrophic coverage

 

People who need coverage as bridge insurance till new coverage starts

  1. in waiting period for new employer based coverage
  2. gap until new coverage (including Covered Ca) starts
  3. students in transition
  4. in between jobs

 

The first group needs to consider a few issues which we'll discuss below. The latter is very well-served by short term coverage.

Let's dive into the each group and what to consider in order to make a good decision.

 

Keep in mind that each person's situation is different and health insurance is complicated.

Our services are free to you. Call us at 800-320-6269 with any questions you have.


Short term health insurance as an alternative to permanent coverage

We'll call this the longer version of short term coverage.

The biggest spike in temporary policies has been from people who are purchasing these plans instead of the permanent or ACA plans.

 

 

Let's quickly explain the differences and some important considerations.

 

First, what do we mean by short term and permanent coverage?

 

Here are the big differences

Short term insurance:

  1. Medically underwritten based on relaxed health questions
  2. Can continue for a fixed period of time
  3. Less expensive (generally 20-40% less)
  4. Faster effective dates (midnight following online app submittal)
  5. Will still have the ACA penalty for not having coverage
  6. Can have discounts for pre-paying period of time
  7. More catastrophic coverage; few copays for office and no RX
  8. Can enroll anytime of the year

 

Permanent health insurance (including Covered Ca):

  1. Guaranteed issue regardless of health
  2. Can continue indefinitely as long as you pay the premium
  3. More expensive (unless tax credit eligible - more on this later)
  4. Effective dates either 1st of the month following submittal or 1 month after that
  5. No ACA penalty if enrolled full year
  6. Fixed monthly premium for full calendar year
  7. Full set of benefits depending on level applying for
  8. Can enroll during Open Enrollment (Nov 1-Jan 31st) or if a specific life change

 

Those are the big differences a person needs to consider if they are considering short term insurance as opposed to ACA compliant coverage.

 

Let's look at the people who are considering this.

 

Missed Open Enrollment

Many people call us after Jan 31st of the year and they want to apply.

That's tough now unless they've had a big life change also known as a Special Enrollment Period trigger.

 

The most common are:

  1. Loss of employer based coverage
  2. Move within/to California
  3. Family make-up change (marriage, divorce, baby, death, etc)
  4. Change in legal status

 

There are a few more less common ones and we're happy to walk through your situation to see if you might qualify.

Outside of Open and Special Enrollment, many people have few options.

 

One option is Short term insurance!

 

That's really a good percentage of the new enrollees. They want "Bridge" coverage until next open enrollment.

Health insurance is not cheap.

 

It's a lot cheaper than an ACL repair!

 

Many people do not realize the risk they are taking by having no health insurance aside from the penalty.

Anything in a hospital is going to be $1000's if not 10's of thousands.

 

Short term works really well here if you missed open enrollment.

 

You can purchase short term any time during the year and renew it monthly. Most people renew it till Jan 1st of the following year when Open Enrollment coverage starts.

 

Keep in mind that Open Enrollment opens Nov 1st for a Jan 1st effective date and we want to enroll by Dec 15th to get a Jan 1st.

 

We automatically notify our short term clients of Open Enrollment and run the quotes for them right away.

We can even establish if they're eligible for a tax credit.

As certified Covered Ca agents, there's no cost for our services at 800-320-6269.

People who missed Open Enrollment can run Short term quotes here:

 

 


People who cannot afford Permanent coverage

This is increasingly common. If a person doesn't qualify for a tax credit (and even some that do), the costs for ACA compliant coverage can be really expensive.

We've seen rates increase 2-3 times since 2014.

Short term insurance is much less expensive than permanent coverage...usually 20-40% less in monthly premium.

 

One important caveat. ..you will likely have the ACA penalty if you purchase short term.

This is $695/adult or 2.5% of income, whichever is higher.

The situations we've seen where this doesn't apply is if the 2nd lowest priced Silver ACA plan is over a percentage of a person's gross.

 

The person may be eligible to request hardship waiver and purchase short term to address catastrophic health care needs

 

More information on the hardship waiver here.

Many people simply can't afford the ACA plans and opt for Short term instead.

 

We're happy to help you compare the two options and we'll definitely first see if you might qualify for a tax credit.

 

Very important and many people calculate this incorrectly (thus missing out on tax credit).


More catastrophic coverage with Short Term

Many people do want to pay for the mandated benefits that are required with permanent coverage such as ACA compliant plans through Covered Ca.

There are 10 Essential Health Benefits that are required by law since 2014.

This is one big reason they are more expensive.

The Short term plans do not have these mandates and therefore, are quite a bit less expensive for core coverage.

Short term plans have become the de facto catastrophic health plans on the market for this reason.

 

Short term plans will generally offer a few office copays depending on duration of the coverage and no RX or preventative benefits.

 

They do provide solid coverage for your more traditional health care needs such as hospital, surgery, emergency, etc.

This is really what health insurance should be about if we want to keep it affordable.

 

For this reason, many people who want to make sure health care expenses don't bankrupt them, turn to short term.

 

Of course, we want to look at the penalty calculation which we'll still incur with temporary coverage.

 

We're happy to run all this calculation for you at 800-320-6269 or you can quote both temporary and permanent (including tax credit) coverage here.

 


People who need Bridge coverage

This is the traditional use of short term health plans.

 

Bridge coverage till new coverage starts.

 

There are many situations that trigger this need but here are some of the most common.

 

Employer plan waiting periods

Many employer plans have waiting periods from 1-3 months depending on the company.

 

The short term plan is a nice filler for these periods of time where a person really wants a low cost option to bridge the gap.

 

Usually, a person between jobs is more cost sensitive and short term is generally priced significantly lower than permanent plans.

Important note: A person is allowed a 2 month gap in coverage without incurring a tax penalty per year.

 

In this case, a person just wants to make sure catastrophic health care needs do not wipe them out financially.

They're less concerned about more routine services such as office visits or preventative care since they will get that under their new plan.


Gap until new plan's effective date (including Covered Ca)

The new rules on effective dates for ACA compliant plans can be complicated.

It's generally one of the following:

  1. 1st of the month following online enrollment
  2. 1st of the month after the #1

 

That means a person may have 1-2 months essentially until their new plan starts.

The easy fix is to get 1-2 months of short term coverage to fill the gap.

 

You can get short term month to month (30 days being the least amount of time) and cancel when ever you like.

 

You can even pre-pay for a fixed period of time to get you right up to your new effective date.

We can help you with either option and make sure you don't have a lapse in coverage.

 

Call 800-320-6269 or run your Short term and permanent quote here:

 


Students and Workers in-between jobs

 

Short term is very popular with this group.

 

Basically, they are coming off of health insurance (either student or employer) and just want a less expensive option until they secure new coverage.

 

This can be a short term duration (1-2 months) or even longer.

 

Keep in mind that short term coverage does not continue indefinitely.

You'll need to re-apply after the max amount of time or enroll in permanent coverage during Open Enrollment.

Either way, the advantage of short term is that it turns around quickly.

Many student plans may not meet the SEP (Special Enrollment Periods) requirements that allow a student to enroll outside of Open Enrollment.

We can check if your plan qualifies and quote short term next to permanent coverage (with tax credit) if available.

 

Take a look at the differences between short term and permanent above.

 

Once you have the core differences down, run your quote here for Short Term and permanent.

We're happy to help you quote both and there's no cost for our services!
 

Call us at 800-320-6269 or request your Short Term Health Quote.


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About CalShortTerm

 

Short term health insurance can be a valuable tool to help protect people during transitional times.  Understanding the pro's and con's of short term insurance versus ACA compliant plans is Invaluable

We are Licensed California Agents with 20+ years of experience helping 1000's of California individuals and families.

Call us. you will be pleasantly surprised 800-320-6269

 
 
 
 
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