Pairing Short Term Medical With Supplemental Insurance
If you are healthy and rarely see a doctor, paying for health insurance can seem like a waste of money each month. It’s a nice to have for emergencies, but it eats away your income, especially if you are trying to get ahead on student loan payments or other bills.
A 29-year old male living in Arizona who purchases his own health insurance can spend approximately $170 a month on a major medical health plan. The plan has a $5,000 deductible, and if he needs to see a doctor, he has to pay 40% in coinsurance after his deductible is met. This means, should the individual have a sudden accident that lands him in the emergency room, he will have to pay out the first $5,000 out of his own pocket, and then 40% of any additional doctor office follow-ups. This is on top of the $170 he is paying each month to have health insurance coverage.
This same man can apply for short term medical insurance and pay an average of $59 each month for nearly identical coverage compared to a major medical plan. He would have the same $5,000 deductible, and even better coinsurance at just 20%. Why so much cheaper? Short term health plans are more affordable because they are just that – a short term solution for consumers that carry less risk for health insurance companies. You can apply for just 30 days or up to 364 days, depending on your state of residence, and many times you are able to sign up for another policy after your initial coverage period ends. This affords you is time to get back on your feet after job loss, or have more money to pay down bills. In this example, our 29-year old man could pay $2,040 a year for major medical insurance or $708 for short term medical.
However, our 29-year old is not that daring. Even though he loves the price of a short term medical plan, there is always a chance he could have a car accident or suffer a major fall hiking with his friends. He doesn’t have $5,000 in savings to spend on medical bills, but also doesn’t have enough income to pay for a more comprehensive (expensive), low deductible plan. So he enrolls in a supplemental insurance plan to complement his short term coverage.
For about $1 a day, supplemental health insurance helps bridge gaps in coverage when accidents or a critical illness strike. Our Arizonan could purchase accident coverage for $5,000, which would cover his medical deductible should he topple from a trail on Lookout Mountain and need emergency care. With that supplemental coverage, he would also have protection for critical illness and term life insurance. Even with the added cost of supplemental coverage, he would still pay less with a short term health insurance plan and supplemental insurance than with individual health insurance alone.
It is important to note that short term health insurance is a temporary option, and not meant to be a long-term health insurance solution. Short term insurance is not considered an essential health plan under the Affordable Care Act, so policyholders could be responsible for paying a penalty at tax time. Under the law, individuals can go up to three months without a qualifying health plan, so carrying short term medical coverage temporarily along with a supplemental health insurance plan can save an individual or family hundreds or thousands of dollars while providing them an affordable insurance option.
Supplemental health insurance can be purchased as a standalone plan or paired with any health insurance coverage, from individual health, to limited benefit and short term medical plans.