Some consumers without subsidized health coverage benefits may be unable to afford the costs of full health coverage on their own. In those circumstances, temporary health insurance is one of the options that could cover the gap between being entirely uninsured and being insured under a traditional health plan.
Typically, short-term health insurance plans last from one month to a year and cannot be renewed or extended. The majority of short-term plans will not cover pre-existing conditions and may exclude preventative care like routine medical visits. Plans are designed to cover only major medical events and will not provide treatment for mental illness or substance abuse. If consumers need to purchase a second short-term plan after the first has expired, the new plan may not cover pre-existing conditions that developed during the first plan’s term.
Most short-term plans define pre-existing conditions as those for which a consumer has been treated, consulted a health-care professional or took medications for in a set period of time prior to the start of the policy. The length of time varies between states, but generally ranges from 6 to 36 months. Note that this definition may differ from the one used by long-term healthcare plans.
The Affordable Care Act (ACA), sometimes referred to as Obamacare, requires insurers to sell health insurance to virtually everyone (often called "guaranteed issue") regardless of health status. As a result, an Obamacare plan would accept insurance applications from those denied short-term medical insurance due to pre-existing conditions. ACA plans can be purchased beginning on November 1st 2020 and will begin coverage in January of 2021.
Short-term health insurance, otherwise known as temporary health insurance or short-term medical insurance, does not meet the coverage standards under the Affordable Care Act. However, in 2020 consumers are no longer subject to a tax penalty for not being enrolled in an ACA compliant health plan.
"Term Health Insurance" is sometimes used interchangeably with "short-term health insurance." Both phrases refer to limited duration medical plans, that is to say, health plans with a fixed coverage period after which an enrollee must apply for new coverage. "Term Health Insurance" is more likely to be used for plans that are around 364 days long while coverage that lasts only a month or two might be referred to more often as "short-term health insurance."
While short-term plans originally grew out of the need for temporary insurance, new products being released under the title Term Health Insurance represent some adaptations to consumer needs during the Affordable Care Act era.
A common question surrounding short term health insurance is whether it provides maternity coverage. Pregnancy is considered a pre-existing condition and since short term health plans are exempt from HIPAA, they typically won’t include maternity coverage. If you are an expecting mother, you may want to consider an Obamacare health insurance plan since those plans are required to provide essential health benefits which includes maternity and newborn care.
No. Because Short Term health insurance plans do not meet the requirements set by the Affordable Care Act, you will still be responsible for paying the tax penalty called the “Shared Responsibility Tax.”
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