Short-term health insurance, also known as temporary medical insurance, can cover your medical expenses when you’re between plans, as when you’ve changed jobs or are waiting for coverage to kick in at a new job.
In the state of Texas, short-term plans can be purchased for a minimum of 30 days and up to three years while you figure out your permanent health insurance needs.1 These policies are structured like typical major medical plans, with a deductible, coinsurance, and sometimes copayments for things like doctor’s visits or prescription drugs.
In many cases, short-term insurance can be purchased back-to-back at the time of sale, allowing you to get multiple years of coverage with one application. Other enrollment features include applications only for a child (starting as young as six months) and the ability to select the deductible, coinsurance and copay features you want during the coverage period, which gives you flexibility on benefits and price.
Is Short-Term Health Insurance Right For You?
Short-term health insurance in Texas can be an affordable alternative to more expensive Affordable Care Act (ACA) federal Marketplace plans or COBRA (Consolidated Omnibus Budget Reconciliation Act) coverage. (You pay for the latter through your employer after you leave your job.)
It’s very important to understand that temporary insurance doesn’t cover preexisting conditions or longer-term conditions like pregnancy.2 If you’re healthy and just need coverage for a specific amount of time while you wait for permanent employer coverage, short-term health insurance can help protect you financially if an accident or serious illness should strike.
Unlike ACA plans, short-term coverage doesn’t have an Open Enrollment Period, which means you can apply at any time and have coverage the very next day. The application will include questions about your current health status to determine if you qualify. But the entire enrollment process can be completed in five minutes or less. That said, be sure to take the time to ensure you understand all the limitations of any policy you’re considering.
Situations When Short-Term Health Insurance Makes Sense
You need to be relatively healthy for short-term coverage to make sense. If you don’t plan to use your insurance and just need financial protection should the unexpected happen, temporary health insurance might be a good fit. Here are other situations in which short-term coverage may make sense:
- You’re between jobs and need coverage.
- You’re waiting for new employer coverage to begin.
- You’re a college student needing proof of coverage.
- You’re aging off your parent’s health plan.
- You’re an early retiree needing an affordable option until you qualify for Medicare.
- You’re newly divorced and lost your spousal coverage.
- You’re no longer eligible for Medicaid but can’t afford an ACA plan.
- You’re self-employed.
- You want an alternative to an ACA plan.
Why Short-Term Health Insurance Might Not Be Right For You
Short-term medical insurance is not for everyone. As mentioned above, these plans don’t cover conditions that have already been diagnosed (i.e., preexisting conditions). For example, if you have Type I diabetes, heart failure or have been diagnosed with cancer in the past and need ongoing treatment, short-term plans will not cover medical bills associated with your illness.
Here’s an example of how essential health benefits of an ACA plan might outweigh the more affordable price of a short-term health plan: A 42-year-old woman gets a preventive annual exam and mammogram each year and takes birth control pills monthly. Under the ACA plan, she receives all these services at no extra cost (beyond her monthly premium) due to the essential health benefits mandate.
She might save $1,000 a year on her monthly premiums by buying short-term health insurance, but she will have to pay out-of-pocket for every wellness service and prescription she needs since short-term plans aren’t required to pay for services deemed as essential health benefits. So if, let’s say, a doctor’s office visit, mammogram and prescription birth control cost a total of $1,500 a year, enrolling in an ACA plan could save her more than $500 in total compared to a short-term plan.
How Much Do Short-Term Plans Typically Cost in Texas?
Short-term medical plans vary in cost based on where you live and your age and gender. A 35-year-old woman in Dallas can sign up for a 364-day policy from $114 to $582 a month, depending on the benefits, according to the Pivot Health cost calculator.
Your premium is the monthly cost of your health insurance plan. Some short-term health insurance can also be pre-paid if you need less than six months of insurance coverage, for which you might get a small discount. If you decide to pre-pay for your short-term medical plan, make sure you’ll need it for the entire time you sign up. There are no refunds on pre-paid premiums.
The deductible is the amount you have to pay out of your pocket before the insurance company is responsible for paying your medical claims. Whether you choose an ACA plan or a short-term health insurance plan, deductibles are part of every policy. Deductibles for short-term plans in Texas can range from $1,000 to $10,000; the higher the deductible, the lower your monthly premium cost. If you want a low deductible, you will have to pay a higher premium.
Once you’ve met your deductible, you aren’t completely off the hook for your medical bills. Coinsurance is the percentage of your medical bill you pay after you’ve reached your deductible amount; the amount is typically 20% to 30%. After that, your health insurance company picks up the rest of the cost. For example, if you’ve met your deductible and your doctor orders an MRI that costs $1,000 and your coinsurance is 20%, you will pay $200 and your insurance company will pay the remaining $800.
Also, some plans have copayments or “copays” that apply to specific treatments or services. You can have a doctor’s office copay or a prescription drug copay, for example, which sets the medical visit or prescription at a flat rate. Short-term health insurance plans with copays might make sense for you if you know you’ll visit the doctor several times during your coverage period.
How to Buy a Short-Term Insurance Plan
Short-term health insurance is readily available to residents in Texas. The best way to pick the best plan for you is to consider these five questions:
- How much can you afford to pay out-of-pocket if a medical emergency arises? This will help you determine how high a deductible to select.
- How much can you afford each month for a premium? Your monthly budget will determine how much you can afford.
- Do you have specific conditions that require regular doctor visits or expensive prescriptions? This will help you tailor the plan to your specific medical needs.
- Do you want to keep your doctor(s)? Some short-term health insurance plans have an open network and some have a national PPO network, meaning you’ll need to see doctors in their network. Check to see if your physicians are in any network you’re considering or will accept a plan with no network restrictions.
- Do you care about the specific health insurance company you’re with, or are you mostly concerned about price?
You can enroll online at a private marketplace like Pivot Health, go direct to a health insurance company or work with a licensed agent.
Remember, the more you plan to use your health insurance, the smarter it might be to spend extra money on the monthly premium to get richer benefits that cover more medical services.
What If I Need Extra Coverage?
An economical way to supplement your health insurance portfolio is to buy supplemental insurance coverage. For a flat monthly rate, you can get accident and illness protection that pays a flat cash benefit should you experience the unexpected and rack up thousands in medical costs.
This type of insurance helps protect your bank account if a high deductible is out of reach and the benefit payment is typically sent directly to you. The money pay for medical bills, mortgage or childcare.
Supplemental health insurance starts at around $30 per month for an individual and can cost up to $100 a month if you want to insure your whole family with top-tier benefits.
Making a Decision
The good news is that as a resident of Texas you have a number of choices when it comes to short-term health insurance plans. You can buy an affordable plan for a minimum of 30 days while you wait for your employer coverage to start, or you can enroll for up to three years while you figure out next steps for permanent health insurance coverage.
The most important factor to remember is to thoroughly read the plan information, including all exclusions and limitations, to make sure you understand what will and won’t be covered.
Once you’ve done your homework and the math as it relates to your budget, you’re ready to enroll in a short-term medical insurance plan with much more confidence.