Cover Health Insurance Gap Before Obamacare Plan Begins

HealthCare Writer

Updated on November 13th, 2020

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The uninsured rate has tumbled since the start of the Affordable Care Act (also known as Obamacare), but there are still 12 million uninsured Americans who are foregoing health insurance coverage. Life situations and finances are a large reason people ebb and flow on and off their state exchange or the federal marketplace every month. For individuals who are uninsured for a few months or awaiting the start of their 2016 Obamacare marketplace plan, there is a temporary solution that can provide healthcare coverage in the interim.

Short term medical insurance provides affordable healthcare protection should the unexpected arise while waiting for an individual health insurance plan effective date to begin. Typically short term health costs a fraction of the dollars compared to a major medical plan. Its affordability comes from the short term nature of an average policy. Available for just 30 days or up to 364 days, depending on state of residence, short term health insurance fills the gap in coverage so no one is left without medical coverage.

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Availability of plans and policy duration vary by state

For individuals shopping for marketplace health insurance during the open enrollment period, coverage does not begin until either the following year, or 15 to 30 days after enrollment, if the coverage year has already begun. This can leave individuals without health insurance coverage for 30 days or more. Instead of risking going without any medical insurance at all, a short term plan can provide basic coverage, giving the insured some financial security should the unexpected accident or illness occur.

Meet Charlie

Charlie has been uninsured for several months after losing his job to downsizing at a large corporation. He’s optimistic that he will find work soon but doesn’t want to put money towards extra expenses while he’s unemployed. Charlie’s good friend Ben is also unemployed since completing his graduate degree. The two discuss finances often since the other can understand each other’s cash struggles. Health insurance has come up on occasion, but both decide to skip coverage since they are healthy and never have issues beyond a bad cold.

One day, Charlie gets a call from Ben’s mother that Ben has been in a car accident and is banged up pretty badly. The accident wasn’t his fault. He was blindsided by a driver running a red light at a major intersection. Ben is having surgery to repair some broken bones, and his mother expresses worry over the cost of care Ben needs. Charlie decides to visit Ben in the hospital a few days later.

When Charlie arrives he finds Ben in traction. He has a crushed pelvis, broken ribs, a broken arm and other lower body injuries. His pelvis has been reconstructed, but the recovery will be slow. Ben will need medical equipment to help him move around, and physical therapy once he leaves the hospital. The reality of not having health insurance has sunk in, and Ben doesn’t know what he can do besides hope his auto insurance will cover some of the bills and then file for bankruptcy if he still has thousands of dollars in medical debt.

While short term health insurance doesn’t cover as much as major medical health insurance policies typically do, Ben could have greatly reduced his overall medical costs if he had a standard short term health insurance plan. Policies differ, but on average, after the deductible, a short term medical plan has 20% coinsurance, up to $1 million, which means Ben would only have had to pay 20% of his medical bills after his deductible instead of 100% of the amount not having temporary coverage.

Unemployed? Extra expenses can strain the budget, but unexpected medical needs can devastate individuals trying to get back up on their feet again. For as little as $100, short term health insurance can offer the uninsured gap coverage until individual medical insurance is obtained.

Short term health insurance does not comply with the essential benefits as mandated by the Affordable Care Act. 

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