Many people are aware that Obamacare tried to ban any kind of medical insurance except the types allowed by HealthCare.gov , the Democrat sponsors of the ACA had to concede that there are circumstances under which ACA plans simply won’t work. So, they allowed for short term medical insurance policies.
These are policies that offer specific benefits for periods up to 3 months in length. Which ,means, you would have to get a new short term policy every 3 months to have all year coverage.
Advantages of short term medical insurance policies:
- MUCH less expensive than Healthcare.gov plans
- Offer similar benefits
Disadvantages of short term policies
- Usually do not include preventative care, vaccinations or wellness exams.
- Benefits are usually capped at $2,000,000 ($2 million)
- No subsidy is available
- They are not ACA compliant (which is a moot point, since, on February 15, 2017, President Trump signed an executive order instructing government agencies to roll back enforcement, effectively waiving the penalty) See this page for details.
- In theory, the insurance provider could stop offering short term policies and you could be without health insurance until the next open enrollment period. Honestly, we view this is a scare tactic spread by proponents of Obamacare, since these plans are profitable. Unless the government decides to outlaw them, we expect them to continue. And since the Democrats are no longer in power, that is unlikely. But it is a possibility, so we would be remiss in not pointing it out.
When does a short term health insurance policy make sense?
You might want to consider a short term plan, if you find:
- that the costs of an ACA plan is prohibitive,
- you do not have substantial ongoing health issues, (short term plans rarely cover pre-existing conditions),
- you do not expect to have substantial health needs ; in other words, you are basically in good health,
- The cost of paying for your existing health issues yourself is less than the difference in the total of the ACA policy premiums minus covered amounts
When does a short term plan NOT make sense?
- If you are pregnant or expecting to become pregnant.
- If you have substantial ongoing health issues (pre-existing conditions)
- You have costly prescriptions (but do compare the costs – some short term plans still make sense)
The bottom line
It all comes down to risks and costs.
- Add up the costs of an ACA plan (the monthly premium times 12, plus the annual deductible) – gives you a general worst case scenario cost
- Add up the cost of the short term plan: (the monthly premium times 12, plus the annual deductible).
- To #2, add any other costs covered by the ACA plan, but not the Short Term plan, IF you will use these, such as an annual physical, flu vaccination, etc.
Then compare the two (#1 vs #2+#3).
There is your decision.
Now, there are actually ways to cut your costs further! See this page for a strategy for the self-employed and unemployed.