Short Term Health Insurance FAQ

What is short term health insurance?

Short term health insurance is an affordable option that helps provide coverage through any transition period when you find yourself without major medical health insurance coverage. You choose the length of coverage, from 30 to 364 days, depending on your state of residence, what deductible amount you wish to have, and how you would like to pay, either monthly or in one lump sum. This type of temporary health insurance plan is not considered an Obamacare plan, meaning it doesn’t meet all of the requirements of the Affordable Care Act, and you could be subject to a tax penalty.  

How long is the “short term” period with this type of health insurance?

Depending on your state of residence, short term medical insurance plans can span from just 30 days to 364 days. This makes short term insurance extremely flexible for your needs.

Is short term health insurance known by any other name?

Yes, the product can be referred to as short term medical or “STM,” temporary health insurance and term insurance depending on the preference of the selling insurance company or marketing agency.

Is short term health insurance the same as individual health insurance?

No, there are differences between short term insurance and permanent individual insurance, also known as major medical health insurance. Short term health insurance does not offer essential health benefits as required by the Affordable Care Act, also known as Obamacare. That means you could be subject to a tax penalty for not carrying a health insurance plan that offers essential health benefits. However, some individuals are exempt for paying a fine because of income restrictions or other life situations. Short term health insurance is typically more affordable than major medical health insurance, and allows individuals to see any doctor or hospital they choose without worrying about in-network vs. out-of-network physicians and facilities that is standard with individual health insurance plans.

Is short term insurance the same as an Obamacare plan found on the marketplace?

No, short term healthcare is different than Obamacare plans, and cannot be purchased on the marketplace exchange. Health insurance plans on a state exchange, the federal marketplace or in the private marketplace are major medical policies that offer 10 essential benefits required as a result of the Affordable Care Act. Short term health insurance is not required to offer these 10 essential health benefits, but still offers some coverage for many of the same services.

Who should buy short term health insurance?

Short term health insurance is a great alternative to regular health insurance! Here are the different life situations where short term medical insurance can fill the gap in coverage:

  • Loss of employment
  • Employer drops employee health insurance benefits
  • Waiting period before new employer healthcare coverage begins
  • Alternative to more expensive COBRA insurance
  • Divorce
  • Turning 26 and losing coverage from parent’s health plan
  • New college graduate and without medical insurance
  • Student insurance alternative
  • Missed the Obamacare marketplace open enrollment period
  • Returning from military duty
  • Part-time worker without employer health benefits
  • Desire cheap health insurance over marketplace insurance plan

Is short term health insurance cheaper than marketplace insurance?

Traditionally, yes. It’s always important to check to see if you qualify for a financial subsidy on a marketplace health insurance plan before purchasing short term health insurance. If you do not qualify for cost assistance on an Obamacare marketplace plan, short term can still provide a more affordable insurance option, even if you have to pay a tax penalty.

Can I get a financial subsidy when I buy short term health insurance?

No, short term medical insurance does not qualify for any cost assistance from the government, unlike marketplace insurance plans.

Can I renew my short term health insurance plan?

Depending on your state of residence, you can re-apply for a new short term health insurance plan once your coverage expires. Once you re-apply and are accepted for coverage for a second time, you are on a new insurance policy, and your deductible and coinsurance amounts start over at zero.

What are the advantages of having short term medical?

There are many reasons why short term health insurance is a great alternative option!

  • There is no waiting period. Once your application is accepted and payment made, coverage can begin in 24-hours.
  • Short term medical is a great option for people who just need to bridge a gap in coverage between jobs or different life situations.
  • No networks to worry about – see any doctor you wish
  • Did we mention its affordable?

How long does it take to apply for a policy?

You can apply for a short term health insurance plan in 10 minutes or less.

So what does short term health insurance cover?

Depending on the level of medical coverage you purchase, you have access to many of the same services covered by a more expensive individual health insurance plan

  • Doctor office visits
  • Emergency services
  • Hospitalization
  • Prescription drug coverage

Is there anything else I should know about short term health insurance?

  • You could be subject to paying a penalty to the IRS at tax time.
  • You cannot have a pre-existing condition
  • You can’t be over 65 years of age

How much is the tax penalty for not having an individual health insurance plan?

In 2015 the tax penalty is $325 per adult in the household, $162.50 per child, or 3% of your income, whichever is greater. In 2016, the tax penalty will increase to $695 per adult, $347.50 per child or 2.5% of your income.