What is Short Term Health Insurance?

Say you’ve missed the open enrollment period for health insurance in your state. Say you don’t have a qualifying life event (moving, marriage, etc.) that allows you to have a special enrollment period. Depending on the state you live in, you can opt for short term health insurance.

What is the Purpose of Short-Term Health Insurance?

Short-term health insurance is a stop-gap measure for those who missed open enrollment period and do not qualify for special enrollment.

It can also bridge the gap before the start of a new job contract, or before marriage becomes a qualifier for a special enrollment period.

Most importantly, it helps you avoid the risk of even a few months without health insurance.

How “Long” Is Short-Term Health Insurance?

Because the federal government does not want short-term health insurance to replace long-term policies, it limits the length. The maximum length of a short-term policy is 364 days (just 1 day shy of a year).

The maximum policy renewal length is 36 months (basically, 3 years). Some states do not even have short-term health insurance, so you need to check with your own region first.

What are the Pros of Short Term Health Insurance?

Major medical procedure coverage. Short term health insurance covers major medical procedures, such as some surgery or diseases such as pneumonia. The insurance will substantially reduce your expenses if these procedures unexpectedly occur.

Lower premiums. Because of the short-term nature of the policy, it has substantially lower premiums per month or per policy.

Ideal for rapid life changes. You cannot always predict the changes that cause you to need or lose life insurance. Short-term health insurance gives you the option to stay covered and reduce your financial risks.

What are the Cons of Short-Term Health Insurance?

Possible uninsurability. To reduce risk, it is difficult to get a short-term insurance policy if you have pre-existing conditions or if you are pregnant. In that case, it would be better to explore federal alternatives.

High deductibles. Because short-term health insurance covers only major medical procedures, it tends to have high deductibles (your initial payout before the insurance provider will start coverage). When you review the premiums, always inquire about deductibles as well.

When Is Short-Term Health Insurance Ideal for You?

When you’re in a life transition. If you want to end your policy with a health care provider for any reason, it’s difficult to do it outside of open enrollment. Short-term health insurance allows you to close a current policy and still be covered until the next open enrollment.

When you’re planning a major life change. If you are planning to change jobs, or return to school, or start your own business, there can still be gray time between the end of your health insurance coverage and the start of special enrollment. Even if you just take out a three-month policy, it should cover all your health insurance bases.

When you’re preparing for independence. Growing up as a dependent, you might need something to tide you over as you start a new job, start a new business, or move spaces. A short-term policy can help this time be less risky when it comes to unexpected bills.

James Donaldson

I like to blog about insurance, health and the great outdoors. Memphis born and raised.